Loans i have approved not contracts,says Osinbajo

                                                              Vice-President Osinbajo

Vice-President Yemi Osinbajo Thursday broke his silence on the notion that President Muhammadu Buhari approved the financing loans for the Nigerian National Petroleum Corporation (NNPC) when the president was receiving treatment in the United Kingdom and had handed over power to him as acting president, stating that he (Osinbajo) indeed gave approval to the joint venture financing loans in accordance with laid down procedure, but he did not approve contracts.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, had in a memo to Buhari, accused the Group Managing Director (GMD) of NNPC, Dr. Maikanti Baru, of awarding contracts to the tune of $25 billion and making senior executive appointments in the corporation without due process and recourse to the board of NNPC which Kachikwu chairs.

However, in its response to the memo, NNPC had said all contract awards had followed due process and were approved by Buhari.

In its response, which was sanctioned by the president, NNPC went further to list contracts and joint venture financing loans approved by Buhari and provided the dates of approval.

But the dates provided in the response by NNPC on when the so-called contracts/joint venture loans were approved raised a red flag when it was pointed out by online new medium Premium Times that they coincided with the absence of Buhari who was away in the UK on health grounds and had constitutionally handed over to his deputy, Osinbajo.

When the red flag was raised, NNPC spokesman, Ndu Ughamadu, rushed to clarify that the said financing loans approved for Shell and Chevron under the joint venture contracts at $1billion and $780 million respectively, were approved by Osinbajo in his capacity as acting president.

However, Osinbajo’s office initially kept mum on the controversy until Thursday when the vice-president’s spokesman, Laolu Akande, stated that Osinbajo approved the loans “after due diligence” had been complied with and in accordance with laid down rules and regulations.

Akande, in a series of tweets on his Twitter handle @Akandeoj, said the approval Osinbajo gave was necessary as a measure to address the huge backlog of unpaid cash calls in NNPC.

According to the tweets, the huge backlog of unpaid cash calls were inherited by the current administration and the approval was meant to stimulate the required investments in oil and gas sector.

“In response to media inquiries on NNPC joint venture financing, VP Osinbajo as Ag. President approved recommendations after due diligence and adherence to established procedure.

“Action was necessary to deal with huge backlog of unpaid cash calls which the Buhari administration inherited and also incentivise much needed fresh investments in oil and gas sector,” Akande tweeted.
Also, yet another statement from Akande last night, added: “Our attention has been drawn to some misleading reports suggesting that the vice-president approved certain procurement contracts for the Nigerian National Petroleum Corporation (NNPC).

“This is totally false, as the approvals referred to were actually for financing arrangements in replacement of the traditional joint venture cash call obligations.

“In the statement of NNPC recently released in response to allegations made by the Minister of State for Petroleum Resources, reference was made to various financing arrangements with NNPC’s joint venture partners, which were approved by the presidency under the current administration.

“There were three such loan financing arrangements made for: (i) NNPC/Chevron Joint Venture Project; (ii) NNPC/Chevron Accelerated Upstream Production Project; (iii) NNPC/Shell/Total/Agip Joint Venture Accelerated Upstream Production Project.

“While the first was approved by the president in person, the second and third were approved by the vice-president as acting president.

“The NNPC Act, Cap. N. 123, Laws of the Federation, (updated to 2010), authorises the corporation to borrow such sums as it may require in the exercise of its functions.

“Sub section (2) goes further to specify the only precondition: ‘The Corporation shall not, without the approval of the President, borrow any sum of money whereby the amount in aggregate outstanding on any loan or loans at any time exceeds such amounts as is for the time being specified by the President.’

“Furthermore, subsection (4) provides that ‘Where any sum required aforesaid – a. is to be in currency other than Naira; and b. is to be borrowed by the Corporation otherwise than temporarily, the Corporation shall not borrow the sum without the prior approval of the President’.

“These financings are purely commercial loans obtained by NNPC and its joint venture partners, mainly from local and foreign banks, to perform their exploration and production activities.

“Repayments are also made out of revenues from the crude oil produced directly by the funded project. Unfortunately, they are being confused with contracts for goods and services.

“The alternative financing arrangements became necessary as inability of government to meet its cash call obligations had stalled further investments in the petroleum sector and reduced the country’s production capacity.”

Also, while answering questions from reporters after the ground-breaking of the multi-billion naira Bonny-Bodo road project in Bonny, Rivers State Thursday, the vice-president went into the semantics of the loans he approved by differentiating them from contracts, when he explained that the approvals he granted to the NNPC while he was acting president were for financing arrangements for the joint ventures between the corporation and international oil companies (IOCs), and not approvals for contracts.

He said: “These were financing loans. Of course, you know what the joint ventures are, with the lOCs like Chevron that have to procure.

“In some cases, NNPC and their joint venture partners have to secure loans and they needed authorisation to secure those loans while the president was away.

“The law actually provides for those authorisations. So I did grant two of them and those were presidential approvals, but they are specifically for financing joint ventures and they are loans, not contracts.”

Meanwhile, Kachikwu, who started the entire storm that has snowballed into who between the president and his deputy actually approved the loans for NNPC, has stated that his memo to Buhari did not border on fraud but on governance and on the best ways to move the oil and gas sector forward in the country.

He also expressed deep confidence in the president as a thorough, clean and meticulous leader whose interest is to better the lot of Nigerians.

Kachikwu, who stated this in Owerri, the Imo State capital while speaking on the third day of Nigerian content workshop organised by the Nigerian Content Development and Monitoring Board (NCDMB), decried the misrepresentation by some Nigerians on the issues raised in his memo, stressing that no one was accused of committing fraud in the NNPC contract awards.

“The conversation has been largely misunderstood to border on fraud. It was not on fraud, but on governance and suggested ways to go about it. I think a lot of people got it wrong.

“People dwell much on issues of sensationalism and leave the main substance. I think I and the Group Managing Director of the Nigerian National Petroleum Corporation, Dr. Maikanti Baru are working together as Mr. President has directed that we move forward,” he said.

According to the minister, “Mr. President has urged the two of us to find ways of working together to remove doubt and rift. Mr. President is a decent man and what he wants to achieve in this country is to leave a legacy for posterity.

“He is a sincere leader, so nobody should accuse him of engaging in fraud.”
He commended the management of NCDMB headed by its executive secretary, Mr. Simbi Wakote, for promoting and enforcing Nigerian content in the oil and gas sector.

“NCDMB is blessed in terms of the quality of personnel in that parastatal. They have done well in ensuring that things move well in his area. Simbi has made the institution stronger and I congratulate you and your folks,” he said.

Kachikwu, however, observed that not much local content had been engaged in offshore oil and gas operations and enjoined the NCDMB to move in that direction.

He announced that by next year, the facilities in Port Harcourt and Kaduna would be available to train unskilled Nigerians to acquire skills in the oil and gas sector, adding that the Petroleum Trust Development Fund (PTDF) and the Petroleum Training Institute (PTI) would be responsible for the programme.