NNPC Subsidiary in N17 billion Contract Scandal

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Maikanti Kacalla Baru

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ONE of the subsidiaries of the Nigeria National Petroleum Corporation (NNPC), the National Petroleum Development Company (NPDC), has become enmeshed in alleged contract scams from which the nation got defrauded to the tune of about $36 million (N16.56 billion) within the last five years.

This was blown open by an anti-corruption group in a petition dated October 12, 2016 addressed to the Group Managing Director (GMD) of NNPC, Dr. Maikanti Baru. In the petition signed by its National Coordinator, Joe Odudu, and National Secretary, Innocent Izoma, the group, which prides itself as the Anti-Corruption Vanguards, alleged that the management of NPDC had been carrying out the fraud on a yearly basis through contracts for Security Patrol Boats for surveillance on one of the national oil assets, OML 119.

The petition reads in part: “We are a duly registered anti-corruption, non-governmental organisation working to ensure that President Muhammadu Buhari’s Change mantra permeates every government institution and leads to cost saving, eradication of corruption and graft for the good of all Nigerians.

“On this note we wish to bring to your attention unfortunate happenings in NPDC. It is sad to note that one of your subsidiaries, the National Petroleum Development Company (NPDC) with a considerable number of oil assets in its portfolio, has been unable to make its mark in the petroleum sector in spite of its huge assets of several oil blocs, freely ceded to it by the Federal Government.

“It is in the light of the fore-going that we wish to bring to your notice the monumental rot in the procurement process of NDPC generally and OML 119 in particular, especially the procurement of security patrols boats to secure their off-shore asset. This contract was signed since 2008 without competitive bidding, in contravention of extant Procurement Laws, at the rate of $40,000 per day.”

According to the petition, “The contract was for provision of three patrol boats with one boat on standby while two boats will provide security coverage. But from the onset of the contract, there has not been any stand-by patrol boat.

“The NPDC has also refused to review or put up this procurement for tender even when oil prices have fallen from over $110 per barrel (which was the price when they initially made the award) to about $40 per barrel. Other oil companies, including TOTAL and SPDC have since cut their procurement costs by over half the price to between $7,000 and $8,000 per patrol boat, equipped with naval personnel and ammunition.

“NPDC advertised the tender for these boats over two years ago, but some criminal cabal within it has refused to process these tenders in line with the Procurement Act. This has enabled them to continue sharing monies and even boast that they have the management staff of NPDC and some top officials at the NNPC Corporate headquarters on their payroll.

“Most scandalous of all, we hear there is a plan to bring in two more patrol boats to this same OML 119 and position them only a few meters from where the other patrol boats are stationed, to protect a platform that is only 14 kilometres away, to be given to the same bogus contractor.

“We shall resist any attempt to commit this impending fraud and bring the entire scandal to the attention of Mr. President and the EFCC, if necessary. Again, we have been informed of another fraud in the short-term hire of anchor handling tugs being justified on the basis of emergency procurement. This involves the hire of three to four AHTS vessels and three are permanently stationed at OML 119, without the fulfilling of either the Procurement Act or Local Content Act.

“This arrangement has been ongoing since January last year on ‘temporary contracts’ totally against the Procurement Act. And it was similar crimes that led to the prosecution of officials of NIMASA by the EFCC. To say the least, such expenditure is much above the market price, and it has cost the NPDC about $7.5 million in excess payments in the past 15 months.” – Blueprint

—  Oct 18, 2016 @ 13:45 GMT

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