After Accusing Baru Of Illegally Awarding $2.7B Contract, Kachikwu Presents Same Contract to FEC

The Minister of State for Petroleum, Ibe Kachikwu, on Wednesday presented to the Executive Council of the Federation for approval the controversial $2.7 billion (about N827 billion) gas pipeline contract he accused the Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Maikanti Baru, of awarding two months ago.

Mr. Kachikwu told State House correspondents at the end of the meeting in Abuja that the Council approved a memo for the award of the pipeline contract he earlier said was awarded by Mr. Baru to a Chinese firm.

The contract is for the installation of the new Ajaokuta-Kaduna-Kano, AKK, gas pipelines under a public-private partnership basis.

Nigerians first heard of the contract after a memo by Mr. Kachikwu dated August 30, 2017 to President Muhammadu Buhari was leaked to the media.

In the memo, Mr. Kachikwu accused Mr. Baru of insubordination and of breaching contracting process in awarding the contract.

He said Mr. Baru refused to involve him, as the chairman designate of the NNPC Board and minister in charge of the Ministry of Petroleum Resources, in the processes of the award of the contract. He also said the board of the NNPC was not carried along.

But on Wednesday, Mr. Kachikwu said he presented the contract to FEC for approval again to correct the infringement of due process by the initial approval.

The controversy that followed the revelation of friction between the two most powerful figures in the country’s oil and gas industry raised tension that threatened the stability of the Nigerian economy.

When the two officials later met at the Nigerian Economic Summit in Abuja made a show of reconciliation by embracing before media cameras and pledging to work together for the overall interest of the industry, Nigerians thought the issues had been resolved.

But Mr. Kachikwu’s decision on Wednesday to present the same contract to FEC for approval triggered fresh public curiosity.

He told correspondents that the meeting, presided by Vice President Yemi Osinbajo, approved his memo for the award of the controversial contract.

When completed, he said, the project would allow holistic movement of gas from the southern corridor to the northern hinterlands for increased gas utilization and power generation.

“We presently have trapped power, trapped gas, all in the southern corridors that is going nowhere because of lack of infrastructure. So, that contract has now been awarded,” he told the journalists.

“But, remember that was partially done. This is a contract that has lasted over 13 years. So we got approval for that today (Wednesday), and so that is going forward very nicely,” he said.

Asked why he had to present the contract again to FEC for approval, Mr. Kachikwu told PREMIUM TIMES it was to correct the irregularity he pointed out in his leaked memo to the President.

“What I wrote to the President in my memo, which was presented to FEC, was to remind him that these were some of the contracts he had already approved,” Mr. Kachikwu said.

“What I complained about was about due process not being following in the initial approvals, obtained without seeking my concurrence or input.

“The due process is that before contracts go to FEC, they should go first to the Board of the company, in this case NNPC, to give everyone the opportunity to make their inputs,’ he explained.

He said before he took the latest memo to FEC, he had followed due process, by taking the details back to the Board, briefed members and obtained their buy-in.

“What I did was an inverse approval process, which is post-the-fact, by taking it to the Board before the FEC. After the NNPC Tenders Board, the right thing to do should be for the contracts to go to the minister, who should even have an input before the Tenders Board finishes its work.

“But because the contract value exceeds the $20 million threshold, the minister has the obligation to take it back to the other Board members for them to review it. Whatever is their opinion would be included in the recommendation by the minister to the President, to guide his decision.

“Based on the President’s input as the full Minister, then the contract would go to FEC. That is the due process of how things should be done,” he said.

Mr. Kachikwu said at the point he wrote to the president in October, approval had already been given, without his involvement in the process and without the input of everyone who should contribute to the process.

The minister, who said he was reluctant to talk about the issue again, said he agreed to speak with PREMIUM TIMES to afford Nigerians the full benefit of what happened.

“I don’t want to go through the whole controversy again. It took a lot out of everybody. We managed to calm things down. All what I did was to correct the wrong in the process inversely by taking it to the Board members to enable them be aware of it and make their inputs,” he said.

When contacted for his reaction, NNPC spokesperson, Ndu Ughamadu, said he preferred not to comment on the issue, since all parties in the controversy had since learnt their lessons and moved on “to allow everyone focus on the bigger picture of ensuring a stable growth of the oil and gas industry and the economy.”

Meanwhile, Mr. Kachikwu said apart from the AKK pipeline contract, the FEC also awarded a contract to a consortium “for the Odidi Pipeline Project from Warri and the Southern marshlands, to move about 364 million cubic meters of additional gas to be produced through the Niger Delta, to be fed into the AKK pipeline.

He said the contacts were all part of the government’s gas gathering system.

“So the two contracts taken together, basically will boost gas delivery in Nigeria, for power generation and for the first time begin to take very definitive steps towards the movement of Nigeria from being a crude oil nation into a gas environment,” he said.