The Battle Before Kachikwu at NNPC

imageIt has been a dramatic season at the NNPC. On hindsight, it should have been expected from a former Nigerian oil czar, anti-corruption activist minded, retired general of a president. Perhaps the public attention had been so captivated by the unfolding story of ‘Getting Deziani’ that no one expected President Muhammadu Buhari’s advance on NNPC when it came. But by August 4, 2014, a few hours after presidential spokesperson, Femi Adesina announced the appointment of Dr. Emmanuel Ibe Kachikwu as the 17th Group Managing Director of the Nigerian Nation Petroleum Corporation (NNPC), public analysts went into over-drive. Just as the announcement of Kachikwu’s appointment was making the rounds, his daughter, Nkemdili, was being delivered of a baby at West Hill hospital in the US. A good sign, sign readers would say. The appointment of Kachikwu as GMD of the troubled NNPC was generally received with applause and considered as one of the best appointments yet made by President Buhari.

Writing in the Street Journal, Chief Mike Ozekhome declared that the ‘announcement of Dr Emmanuel Ibe Kachikwu as the new GMD of NNPC signposts the real change President Buhari has been preaching. Dr Kachikwu is a thorough bred, oil czar, and indeed a round peg in a round hole’. A stakeholder in the oil and gas sector Mr Emmanuel Iheanacho, Managing Director, Integrated Oil and Gas Limited described it as ” a welcome development”. Another stakeholder Mr. Chinedu Okonkwo declared that “that is the change the people had been clamouring for. Buhari understands the system and he is the man for the job”. Lagos pastor and public analyst Pastor Murphy Ikeotuonye was less upbeat. ‘Do I smell a rat in this Ibe Kachikwu appointment? Do I sense a Greek gift? A Trojan horse of some sort? Has he been given a task he is doomed to fail from the beginning? He has been mandated to reform NNPC. But I wonder why with his vast experience in the oil sector (reputed to have been instrumental in the midwifery of the ExxonMobil merger), he was not made petroleum minister? Here is my thought: We know that the job of the GMD is to sign money for government. Nothing more. We know that the petroleum minister is the real power at NNPC (apart from the president) as the chairman of the board. He over rules the GMD at will. So why put the burden on Kachikwu’s shoulder? What will Kachikwu achieve with a minister who chooses to tie his hands. As it stands what is the likelyhood that with Kachikwu as GMD that another Niger Delta person will be appointed minister? With the PIB in the cooler what will be difference?’ But Tony Kan publisher of Sabinews and an old associate of the new NNPC boss is of the opinion that as Group Managing Director, Kachikwu will provide supervisory oversight over all subsidiaries of the NNPC and with many hinting at the fact that Buhari wants to keep the petroleum portfolio, Kachikwu will likely function as the petroleum minister by default.

Solemnly, describing his new job as a ‘serious national assignment’, Ibe Kachikwu quickly stopped the gathering familiar bandwagon of favor-seeking newspaper felicitations by asking instead for prayers from friends, reminding the public of the patriotic and critical nature of the daunting rescue mission to which the president had called him. Saving NNPC would indeed be crucial to saving Nigeria. The performance and financial health of the state run mega-corporation which could be described as Nigeria’s financial lifeline would directly impact the Buhari administration’s ability to tackle the north-easterly carnage of insurgency, the nationwide pandemic of corruption and the revival of the prostrate Nigerian economy

President Muhammadu Buhari has since fired all Group Executive Directors (GED) of the Nigerian National Petroleum including Ian Udoh, who was in charge of Refining & Petrochemicals; Adebayo Ibirogba, who supervised Engineering and Technical; and David Ige, in charge of Gas & Power, Aisha Abdurrahman, who headed the Commerce & Investments directorate; Dan Efebo, who was in charge of Corporate Services, Attahiru Yusuf, the GED for Business Development and Bernard Otti, head of Finance and Accounts. Mr. Dawha, the former GMD headed Exploration & Production unit.

Dr. Kachikwu has not wasted a moment. He has hit the ground running, optimally pruning down the number of departments in NNPC and embarking on an audit of the oil swap process. Following the carte blanche given to him by President Muhammadu Buhari to clean up the Nigerian National Petroleum Corporation (NNPC) and plug the leakages in the state-run oil firm, the new GMD has started inviting oil traders who were awarded crude oil swaps and offshore processing contracts by NNPC during the administration of President Goodluck Jonathan to a reconciliation process of the oil swaps and offshore processing agreements (OPAs). This is to determine if all oil traders met the terms of their contracts in delivery of fuel product cargoes to NNPC’s subsidiary the Pipelines and Products Marketing Company (PPMC).

There is the suspicion that some traders may have lifted crude oil and sold it, and then under-delivered product cargoes to NNPC, thus costing the country several billions of dollars. A report released by New York-based Natural Resource Governance Institute (NRGI) claimed that Nigeria lost over $32 billion oil revenue due to the mismanagement of domestic crude allocations (DCA) by NNPC, as well as the opaque revenue retention practices and oil-for-product swap agreements signed between the corporation and some oil traders.

Reliable sources indicate that wherever Kachikwu establishes that traders under-delivered fuel cargoes, they would be asked to repay NNPC what they owe, It has been hinted that the GMD would even be willing to accept a payment plan that would ensure that such companies do not go under. The GMD could also be investigate what became of the funds meant to have been paid to or swapped on behalf of PPMC on retained petroleum products such as low pour fuel oil (LPFO), naphtha, bitumen and other heavy fuels that the oil traders were not required to deliver.

Unravelling the financial shenanigans of the corporation will not be easy. Efforts to verify claims by former Central Bank of Nigeria Governor, Lamido Sanusi which alleged that the NNPC had failed to account for $20 billion were frustrated. After initially admitting to not accounting for $10.8 billion, key people in the former administration set about hindering a subsequent forensic audit by Price Waterhouse Coopers, which in its report, had caveats noting that it was not availed of certain relevant information. Earlier audits by KPMG and the Nigerian Extractive Industry Transparency Initiative, among others, uncovered shady deals, illegal deductions and withholding of state funds, false subsidy claims of N28.5 billion (2007 and 2009 alone) and a culture of bribery and collusion among the NNPC executives, political office holders and external players.
The Economist, a United Kingdom-based newspaper, describes the NNPC as the most opaque of all National Oil Companies. “Politicians, oil workers and security forces are said to be behind the complex cartels that steal, illegally refine and sell crude oil. They have amassed almost unimaginable wealth in a country where poverty is still rife…Oil taint has seeped into almost all levels of government and business. Yet, the central problem is found in the petroleum ministry, which wields vast unaccountable power. The NNPC, a state-owned behemoth, is responsible for all aspects of the industry, from exploration to production and regulation. It is among the most secretive oil groups in the world, and is “accountable to no one.” Indeed, the NNPC’s entire downstream operations amount to one huge fraud. With four domestic refineries, a recent report said they were operating at just over 10 per cent capacity.

… the NNPC buys 445,000 barrels of domestic crude, to match its installed capacity, ostensibly to refine or swap for refined petroleum products abroad, yet spends vast sums on turnaround maintenance and pays itself subsidies. The swap arrangement, as President Buhari has revealed now allows cabals to fleece the taxpayer every day. On kerosene, Lamido Sanusi, said: “In dollar terms every vessel of kerosene imported by the NNPC with federation money costs about $30 million and was sold at $10 or $11 million, generating rent of $20 million per vessel to the syndicate.” But the NNPC Group Managing Director at the time Andrew Yakubu, accused Sanusi of being ignorant of “the technicalities of the oil industry.”

Now, the “technicalities” of the NNPC’s house of fraud are coming into the open. An exasperated Buhari has disclosed that up to the 10th of this month, Nigerian crude was still being illegally lifted by people who are in government. Despite producing an average of 2.2 million barrels of crude per day in 2014, the country imported most of its daily consumption of refined products of 43.5 million litres per day and spent $8.99 billion on questionable subsidy in the 18 months to June 2013. In 2011, the Goodluck Jonathan government paid out N2.5 trillion as subsidy when only N245 billion was budgeted for it that year.

In 2012, the NNPC sold N2.77 trillion of domestic crude, but paid only N1.66 trillion to the Federation Account; in 2013, it earned N2.66 trillion but paid N1.56 trillion; in 2014, it earned N2.64 trillion but remitted N1.44 trillion, while between January and May 2015, it earned N733.36 billion and remitted only N473.2 billion. According to Gov. El-Rufai, the NNPC remitted only 58 per cent of revenues earned between 2012 and 2015, leaving only 42 per cent for the federal, state and local governments to share, meaning that the NNPC appropriated more funds than were available to the federal, state and local governments combined. A minister has been mentioned as stealing as much as $6 billion.

By 2010, the world’s 13 largest oil and gas companies were NOCs, accounting for 75 per cent of all crude production. Six of the 10 biggest by 2013 were NOCs with Saudi Arabia’s Aramco the biggest in terms of production and reserves. Though state-owned, Aramco is run professionally and like Kuwait’s KPC, Mexico’s Pemex, China’s PetroChina and Sinopec, Russia’s Gazprom and Brazil’s Petrobas, is driven by the profit motive. Norway’s Statoil, 67 per cent owned by the state with the rest publicly owned, is the world’s 11th largest oil company by revenue and the 26 largest company of any industry by profit and operates in 36 countries.

For the NNPC, however, the scandals have been too many with very little value addition. Successive governments have been part of the looting orgy, which reached its peak during Jonathan’s era. President Buhari wishes to slay the leviathan. The man for the job Dr. Emmanuel Ibe Kachikwu is a patriot, brilliant, creative and knows how to dominate his environment. Though this is his first foray into public office, he has been making sacrifices for the Nigerian project for decades in the private sector and at the community level. He is a legend in the media. He is one of those who have blazed a trail in the media, not for profit but for love. As a writer and publisher, he had invested a lot of his life, passion and money into pioneering the romantic magazine genre in Nigeria. Kayode Ajala who edited Kachikwu’s flagship magazine Hints in the 1990s remembers that in the early years of Hints magazine, Mr. Kachikwu contributed stories as well as anchored a weekly column, ‘Fatherhood with Ibe,’ where he shared with his readers his experiences as a father. “As editor, I would call him to harass him that he was not meeting my deadline…Even though he was my employer, I would tell him ‘Hey, you have two stories to give me this week and you have not done it.’ And he would rush to do it, otherwise I will make a lot of noise that he was the one slowing down my production.” Today, Kachikwu’s media group publishes Complete Fashion, Beat Box and Hello Nigeria.

Kachikwu’s academic distinction and career brilliance is now renowned. Tony Kan also former editor of Hints magazine waxed lyrical about this in his breathtaking essay ‘ Can Ibe Kachikwu Save NNPC? ‘A first class graduate of the University of Nsukka,’ Tony Kan beamed, full of pride. ‘Ibe Kachikwu who studied law like his father was the best graduating student from the Nigerian Law School, winning seven of the available nine prizes in 1979. He proceeded to Harvard where he obtained an LLM with distinction in 1980 with specialization in Energy, Petroleum Law and Investment. before obtaining an S.J.D. An S.J.D is equal to a Phd but it is important to make that distinction before it becomes a talking point. Dr. Ibe Kachikwu has a doctorate with specialization in Petroleum and Investment Law Strategies, the S.J.D, Doctor of Juridical Science is Harvard Law School’s most advanced law degree, designed for aspiring legal academics who wish to pursue sustained independent study, research and writing and he obtained it in record time just as he did his LLM. Intelligent, suave, well-read and imbued with a prodigious intellect and almost photographic memory, Ibe Kachikwu taught at the Nigerian law school and has published well over 10 books on various aspects of the law including the well regarded tome, Nigerian Foreign Investment Law and Policy. But many do not know that Ibe Kachikwu published his first book, a novel, while still a teenager. His love for writing would lead him to set up Nigeria’s most popular and once biggest selling soft sell magazine, Hints alongside Chanelle magazine where many well-known Nigerian writers and journalists like Kayode Ajala, Chidinma Awa Agwu, Grace Orji, Chim Newton, Reuben Abati, Olayinka Oyegbile, Sunny Okim, Peter Okwoche of BBC, Helon Habila, Toni Kan, Terh Agbedeh, Ngozi Emedolibe, Stella Dimoko Korkus, Pat Esame Okwoche, Sam Umukoro and many once worked.’
Ibe Kachikwu has spent over 30 years in the Oil and Gas sector as a top management staff involved in policy setting and decision making. He was General Counsel/Legal Adviser, Texaco Nigeria and Texaco Overseas Petroleum Co (1984 -1994); General Counsel/Secretary, Mobil Producing Nigeria Unlimited (2001); Executive Director and Vice Chairman, ExxonMobil Group of Companies (2003 till date). He became the Executive Vice Chairman/General Counsel, ExxonMobil Companies in Nigeria and Oversight Counsel, ExxonMobil Companies in Africa in 2009. He is reputed to have facilitated in excess of $10 billion investment from ExxonMobil Group into Nigeria and Africa.

The Group Managing Director of the Nigerian National Petroleum Corporation, Emmanuel Kachikwu has also been rudely awakened by the Nigerian cyber-fraud community. It is a common danger which threatens high ranking Nigerian public officers. Recently, the NNPC raised the alarm that fraudsters had created phony accounts in the GMD’s name on Facebook in order to defraud unsuspecting members of the public.
In a release from Ohi Alegbe, the spokesperson for the corporation, Mr. Kachikwu lamented that the fraudsters were using the phony accounts “to send all manners of scam letters and phantom contract deals cum cash solicitations to some highly placed contacts within and outside the oil and gas industry…While we explore all options to arrest this menace, we wish to advise members of the public to disregard any such Facebook page purportedly belonging to the GMD of NNPC as he does not operate any Facebook account,’’
There is no evidence to show that NNPC forwarded to the treasury any revenues from sales of Okono crude with an estimated value of $12.3 billion (over 100 million barrels) between 2004 and 2014. The corporation has provided no public accounting of how it used a decade’s worth of revenues from an entire stream of the country’s oil production. In three years (2011-2013) NNPC spent $18 billion dollars from domestic crude sales. These are the kind of occurrences that Kachikwu is expected to halt in the place described by Senate President Saraki as the ‘engine room of corruption.’.
As a publisher, Kachikwu has dealt with treacherous newspaper distributors at Kakawa Street Lagos. As a banker, it would be difficult to smuggle money past him. His wealth of experience at monitoring compliance anti-corruption measures in the Oil and Gas sector should be second to none. During his installation as the Odogwu of Onicha-Ugbo, he had made legendary preparation. The town was agog on the morning of the installation. The Odogwu designate was expected to walk through the town to the place of his installation where he would be received by the Obi of Onicha-Ugbo, other monarchs, chiefs of the realm, citizens and visitors to the town. People had come from all over the federation. It was a bright and sunny morning by the time the Odogwu stepped out with his traditional warriors and set out on foot for the installation ground. Soon a crowd of the town’s young men and well wishers filled the road behind him. After about an hour’s trek, he arrived at the Ime-Obi to the rapturous welcome of the land’s finest. His installation then began. At the end, he was required to walk through the town and back to his white idyllic country villa, Eden Retreat, on foot. It had drizzled the previous night and as soon as he began the walk, the heavens opened and the rains breaking away to do its worst, pelted every one with fury. The crowd dashed for cover. In a few minutes, the roads were deserted except for the Odogwu and his braves. Walking jauntily, Onicha-Ugbo’s traditional war minister ignored the cold pin-pricks attacking his person and continued his advance, machete and spear firmly in hand. The criminal elements in the Oil and Gas sector and the robber barons at the NNPC who plan to defy the GMD’s steely will to turn-around the state-owned oil giant had better be prepared for war. Betting men should put their money on Emmanuel Ibe Kachikwu.

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