The NNPC’s contract scandal offers another opportunity to reform the corporation

Even if the belated response of Mr. Maikanti Baru to the leaked memo containing grave allegations on the running of the Nigerian National Petroleum Corporation (NNPC) could be excused, the standards of behaviour in the state-owned oil company are troubling.

While the NNPC superintends the wealth of the nation, there are many grey areas which have continued to allow the organisation to be run more or less like a personal estate.
Baru, the Group Managing Director of the NNPC, said pointedly that the Minister of State, Petroleum Resources, Mr. Ibe Kachikwu and the NNPC Board were irrelevant in the award of contracts.

He said only the NNPC Tenders Board, incidentally chaired by Baru himself or the President in his executive capacity or as Minister of Petroleum, was responsible for the approval of contracts. But if, as Baru maintained, the governing board was responsible for approval of work programmes, corporate plans and budgets, is it not implicit that it should know about the award of contracts? What is the purpose of a board if vital decisions affecting the organisation are taken without its knowledge? In any case, the act establishing the NNPC explicitly states that the affairs of the corporation “shall be conducted by a Board of Directors of the Corporation which shall consist of a Chairman” and some others. So how can these supervisory powers be exercised without some kind of oversight on contracts worth billions of dollars?

There are so many pertinent questions begging for answer in the response by Baru which deliberately ignored another weighty allegation: that the GMD by-passed the board in appointing senior management staff for the company. What is further perplexing is that President Muhammadu Buhari is yet to intervene in the controversy that has been the subject of headlines and heated debate for two weeks. However, if Baru’s activities were condoned, what evidence is there that this administration is out to curtail the dismal culture of impunity at the NNPC or in the public service?

This is why the issue at stake is beyond the mistrust between Kachikwu and Baru, and who calls the shots at the NNPC. At stake are the observance of due process, and even more, the health of the economy. The NNPC has a dismal record when it comes to the issue of transparency and accountability. The revelations from the investigations of Mrs Diezani Alison-Madueke, former Petroleum Minister, are not only stunning, but bear witness to the abysmal recklessness in the management of our oil industry. But as things stand today, nothing is being done to correct the grave mistakes of the past and to ensure history does not repeat itself.

For decades, there have been efforts to address the legal, institutional and regulatory framework weighing down the NNPC and indeed, the entire oil industry. Kachikwu had, for instance, said a while ago before the National Assembly that there was a broad consensus that the role of government in the sector needed to be “better clarified” whilst the policy, regulatory and commercial institutions “need to be given a refocused mandate to ensure better sector governance, transparency of regulations and operations”.

Unfortunately, no government has been able to summon the courage to address the impunity and the arbitrariness in the sector with the overall aim of closing the loopholes that breed corruption. But given recent disclosures, there can be no better time than now to fast-track reforms in the NNPC and make it more beneficial to the Nigerian people. So too is the need to speed up the passage of the Petroleum Industry Bill (PIB) which aims at strengthening the institutional and governance structure of the oil industry and the promotion of transparency and accountability.