Nigeria's NNPC Rejects Need to Tell Minister About Oil Deals

Updated on
  • Oil company says not obliged to report to minister of state
  • Kachikwu complains to President Buhari about NNPC head Baru

Nigeria’s national oil company said it faced no legal requirement to consult Minister of State Emmanuel Kachikwu about crude contracts, rejecting his allegations of mismanagement and confirming a split among top officials in Africa’s biggest oil and gas producer.

“The law and the rules do not require a review or discussion with the minister of state or the NNPC board on contractual matters,” Ndu Ughamadu, an Abuja-based spokesman for the Nigerian National Petroleum Corp., said Monday in an online statement. The company needs only the approval of the president “in his executive capacity or as minister of petroleum,” or the cabinet, he said.

Kachikwu complained in a seven-page Aug. 30 letter to President Muhammadu Buhari, who holds the portfolio of petroleum minister, that $24 billion of deals were made by the NNPC without due process. He alleged that during the more than one-year tenure of Maikanti Baru, the company’s group managing director, no deals were submitted to the board for approval despite a legal requirement that contracts above $20 million need to be reviewed and approved by the board, which he chairs. The letter was leaked to the press on Oct. 4.

Dirty Washing

“The president -- and the public -- now have two sharply contrasting views of how the oil industry in Nigeria is being managed,” Antony Goldman, analyst and director of London-based PM Consulting, a risk advisory that specializes in West Africa, said in an emailed response to questions. “It’s a level of dirty washing in public between key officials that does the industry, and Nigeria more generally, few favors.”

Nigeria’s manager-level oil union took sides with Baru on Monday and said that Kachikwu should stay clear from interfering with the management of the NNPC.

“Problems will continue to occur as long as the chairman of the board will continue to meddle into day-to-day running of the organization,” the Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, said in an emailed statement. “Any attempt to allow this to happen will spell doom for the country and create a window for abuse,” it said.

Nigeria derives more than 90 percent of its export income from crude. The state oil company has in the past been criticized for a lack of transparency and corruption. In 2013, former central bank governor Lamido Sanusi alleged the company, then managed by a predecessor of Baru, had retained at least $12 billion of revenue that was due to the government. The NNPC denied any wrongdoing.

The Senate said last week it would probe Kachikwu’s allegations against Baru.

— With assistance by Karl Maier

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