Nigeria's oil minister and Organisation of the Petroleum Exporting Countries president Emmanuel Ibe Kachikwu (left) and Opec secretary general Abdullah al-Badri address a news conference after the latest meeting of oil ministers in Vienna, Austria. Picture: REUTERS/HEINZ-PETER BADER
Nigeria's oil minister and Organisation of the Petroleum Exporting Countries president Emmanuel Ibe Kachikwu (left) and Opec secretary general Abdullah al-Badri address a news conference after the latest meeting of oil ministers in Vienna, Austria. Picture: REUTERS/HEINZ-PETER BADER

Abuja — Nigeria’s oil minister sent a letter to President Muhammadu Buhari, listing at least $24bn worth of contracts involving the state oil company that he said were never discussed with him or the firm’s board, a copy of the document shows.

Emmanuel Kachikwu, the state minister for petroleum resources, complained in the seven-page, August 30 letter to Buhari that during the more than one-year tenure of Nigerian National Petroleum Corp (NNPC) group MD Maikanti Baru, no contracts had been submitted to the board for approval despite a legal requirement that "all contracts above $20m would need to be reviewed and approved by the board of the NNPC."

"The communication under reference is a normal procedural correspondence by the minister to the president relating to developments in parastatals under his supervision," the oil ministry said in an e-mailed statement, without giving any further information. A spokesperson at the NNPC didn’t immediately respond to calls and a text message seeking comment. Two spokespersons at the presidency weren’t available for comment.

Nigeria, Africa’s biggest oil producer, derives most of its export earnings from crude. State-owned NNPC has in the past been criticised for a lack of transparency and corruption. In 2013, Lamido Sanusi, the central bank governor at the time, alleged the company, then managed by a predecessor of Baru, had retained at least $12bn of revenue that was due to the government. The NNPC has denied any wrongdoing.

Crude contracts

Kachikwu listed a range of contracts including that for a national fuel-pipeline network, production service contracts and so-called crude term contracts awarded to companies selling crude on behalf of the parties of the joint ventures between the NNPC and international oil companies.

"Contracts of those sizes need to be approved by one of two bodies; the NNPC board or the cabinet. Kachikwu sits on both and if he did not know about them, then something is terribly wrong," said Cheta Nwanze, an analyst at Lagos-based advisory SBM Intelligence. "This is a setback for ongoing oil industry reforms and Nigeria will be poorer for it in terms of transparency and accountability."

In the letter, Kachikwu said he had learnt about NNPC appointments through the media rather than from Baru, who should have consulted him. This was "blatant insubordination" because the company falls under the oil ministry’s supervision, he said.

He asked Buhari to "instruct" Baru to follow due process in the management of the NNPC and that "recently announced organisation changes be suspended until the GMD, myself and the board have made relevant input to same."

ThisDay newspaper reported on the letter earlier.

Nigerian legislators appointed a committee during Wednesday’s proceedings to investigate the allegations made by Kachikwu, Senate president Bukola Saraki said.

"They must be investigated and the report brought back to us as soon as possible," he said.

Bloomberg

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