The whole gist around Kachikwu, Baru & NNPC’s unending scandals

The Nigerian Senate has set up a committee to investigate the corruption allegations against the Group Managing Director of the Nigeria National Petroleum Commission, NNPC, Maikanti Baru. The committee will also investigate the issues raised in the letter which was sent to the President by the Minister of State for Petroleum, Dr. Ibe Kachikwu and recently leaked.


In a letter dated August 30, 2017, and addressed to President Muhammadu Buhari, the Minister had accused Baru of insubordination and illegal practices. The letter was dated a day after NNPC announced a massive shakeup which affected 55 management staff.


The Senate committee is to be Chaired by Aliyu Wamako while its members include Tayo Alasoadura, Akpan Bassey, Samuel Anyanwu, and Ahmed Ogembe. Others are Chukwuka Utazi, Rose Oko, Baba Garba and Kabir Marafa.


Senator Anyanwu, who presented the motion, emphasise the need for Senate to investigate Mr Baru’s involvement in the alleged corrupt activities of Duke Oil. He pointed out that the company was being used as a conduit pipe for swindling the nation.


This is not the first time, the state’s oil firm is being dragged in the corruption waters.


The state oil giant has been mired in corruption allegations and losing money for many years. Auditors found that between 2007 and 2009 alone, the NNPC over-deducted funds in subsidy claims to the tune of N28.5bn. It has not been able to account for the sum ever since.


The Federal Government further hired KPMG and another Nigerian auditing firm, S.S. Afemikhe & Co to look into the firms book.


In 2016, after the KMPG audit on the oil body, revealed that $16bn of the oil revenue went missing in 2014.


The funds from 2014 aren’t the only time NNPC has withheld payments. A previous audit revealed the company owed $1.48 billion. That figure itself may be conservative. Lamido Sanusi, the former Central Bank Governor, had alleged NNPC withheld $20 billion it owed to the State. He was fired after making this claim. Similar allegations of corruption—and equally vast sums—have been directed at various government agencies and officials.

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The auditors’ analysis indicates “over-deduction for these two months amounted to N14.9bn. However, only was swept into the Federation Account by the NNPC as adjustment for subsidy claimable in the two months.” That is beside the N11.8bn subsidy claim the NNPC claimed it paid for imported products that didn’t reach consumers.


A separate audit ordered under former President Goodluck Jonathan and carried out by global accountancy firm PwC, found that the NNPC had failed to pay the government $1.48bn between January 2012 and July 2013.


This was one of the major reasons that made President Muhammadu Buhari appoint Dr Kachikwu as the Minister of State for Petroleum to fix the unending corruption practice in the body.


The Minister quickly swung into action by cutting the number of short-term crude marketing contract recipients, restructuring NNPC into seven independent business units.


But it turn out to be business as usual for NNPC as the companies that Kachikwu awarded the crude oil lifting contracts and import of refined petroleum products are connected to either fraud cases in the past or have political affiliations.


Although Nigeria is an important crude oil exporter, it imports most of its refined petroleum products and there are many ways to exploit the subsidies paid on these shipments.


One of the most popular is called round tripping, where fuel that has already been imported and a subsidy paid is taken just outside Nigerian territorial waters and back in again to double the subsidy.


The Government has long paid subsidies on more fuel than Nigeria actually consumes.

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There were also concerns at the time that “the procedures for managing and reporting the country’s crude oil and gas revenues are opaque and characterized by gaps, overlaps and inconsistencies in the role of key parties responsible for the assessment, collection and reporting on these revenue streams.”


Officials of the Petroleum Ministry and the NNPC, a source at the Finance Ministry disclosed, developed cold feet after the auditors were sent in, and indeed tried hard to frustrate the representatives of the two audit firms by failing to supply evaluation criteria for commercial bids submitted in respect of petroleum products importation.


Believing that would turn the auditors away, our source further explained, the corporation also failed to provide them with other relevant documents such as the criteria for allocation of products and product volumes to importers/suppliers and periodic prequalification list of approved products importers/suppliers.


Senate President, Bukola Saraki also described the corporation as an engine room for corruption and that those in charge are yet to be brought for justice.


In April this year, the Corporation was reported to have sacked top Managers after confirming the missing of 130 million litres of petrol.


The of  State’s letter to the President had the following points of concern:


1. The Minister claims he was not consulted before massive changes and employments were made in NNPC. The Board Service Committee, whose job it is to review potential appointments and terminations was also not informed. Punch is reporting sources saying the NNPC Boss did not do this because the Minister is not the Minister of Petroleum but the Minister of State for Petroleum. The Nigerian National Petroleum Corporation  Act, Part 1, Section 1, Sub-section 3 says the Minister of Petroleum Resources shall be the Chairman of the NNPC Board. Although this title is presently held by President Buhari, the President himself inaugurated Mr. Kachikwu who is the President’s deputy in the Ministry.

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2. Despite the provision that contracts over 20million dollars be approved by the NNPC Board, in a whole year of Mr. Baru’s service as NNPC Boss, not a single contract has been run through the Board, the Minister claims. He added that Mr. Baru claims these approvals were gotten from the President himself who is the senior Minister, but argues that a Minister of State should not hear of contracts on the newspaper for the first time. It is not clear if President Buhari indeed approved these contracts.


3. Mr. Kachikwu claims Mr. Baru has consistently sidelined him, campaigned against his name and humiliated him. He lamented how the NNPC Boss never reports to him even when other parastatals under the Ministry does. He added that even when the President was away on medical leave it was the same.


4. Mr. Kachikwu complained of Mr. Baru’s absence at most meetings he calls and in-courteous manner of sending down subordinates to represent him.

5. Kachikwu complained about how the NNPC Boss distance NNPC Staff from him by causing fear in the system.  He said he has been labeled anti-North, Corrupt and an ally of militants.


The letter ended with the following prayer

1. That the President saves the NNPC from lack of transparency by empowering the Board he inaugurated.


2. That the President saves the Office of the Minister of States for Petroleum Resources by instructing all parastatals under it to report and allow themselves be supervised in line with due process.


3. That the President puts on hold the reorganization done without due consultation and allow those who should be involved be involved.


UPDATE: NNPC gives a comprehensive reply to all allegations. Read it HERE

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The whole gist around Kachikwu, Baru & NNPC’s unending scan…

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