Kachikwu, Baru and the NNPC debacle

The current NNPC debacle is probably the most embarrassing, even if mercifully, eye-opening crisis in the history of that nationally strategic institution since its creation in 1977. I seek in the following commentary to offer a number of observations that would probably throw some light on the muck and confusion running riot out there on the matter. In my view, it was an error to have paired the Group Managing Director of the Nigeria National Petroleum Corporation (NNPC), Dr Maikanti Baru, with Dr. Ibe Kachikwu.

I say this for two reasons. When Dr. Ibe Kachikwu was appointed the GMD in charge of the NNPC and as Minister of State in 2015, it looked like a dream appointment and an extra-ordinary career point for him but not necessarily for the sector. Dr Kachikwu did not hesitate to assert himself and in his attempt to reform the NNPC, one of the victims was a certain Dr Maikanti Baru, most senior Executive Director at the NNPC, who was redeployed under the new dispensation as a Technical Adviser in the Ministry of Petroleum. This was like sending Baru to desert territory of the oil and gas sector. How the same Baru eventually got rehabilitated as GMD of the NNPC, to work with the same man who had tried to marginalize him within the system was a poor demonstration of an understanding of human psychology.

It was common knowledge that there was no love lost between the two men, and yet someone thought it was a good idea to force them to work together as a team. Leadership failed at that point, because the arrangement was not going to work. The Ministry of Petroleum and NNPC that emerged at that point was built on a fulcrum of conflict of personality and interest. The key players in the oil and gas sector can only work together as a team if they must reduce the opaqueness and conflicts in that sector, but the pairing of Kachikwu and Baru practically showed a lack of understanding. The crisis that has now erupted between both men was foreseeable, and I dare say, avoidable. Where is the wisdom in forcing two persons who have shown open dislike for each other to work together?

But let us consider the other level of the conflict: and that is the conflict of interest. One major issue in the oil and gas industry, over the years has been the uneasy relationship between the Ministry of Petroleum and the International Oil Companies (IOCs). The Ministry of Petroleum through its parastatals, the NNPC, and more particularly, NAPIMS, regulates the IOCs. Nonetheless, the relationship between the regulator and the IOCs has always been like that between the cat and the mouse. Civil servants not just in the NNPC but elsewhere within the government have a penchant to want to work with their own.

Political appointees are treated with suspicion, as wayfarers, as the civil servants seek to protect their own territory. The battle for territory in the Nigerian government is one of the most vicious fights in the corridors of power. So it has been that in the oil and gas industry in Nigeria, every attempt to appoint an IOC-associated person as head of the NNPC or other parastatals under the Ministry of Petroleum has always resulted in the equivalent of street fights. Under President Olusegun Obasanjo, Edmund Daukoru and Funso Kupolokun could not forge a seamless relationship even if Daukoru spent only five months or so in that position. Diezani Allison-Madueke was also from the IOCs (in her case Shell) and obviously she had issues with NNPC and Ministry officials. She had an advantage though: no GMD of NNPC would dare stand up to her, or by-pass her.

The belief within the Ministry of Petroleum system is that Ministerial appointees from the IOCs have interests that are different from their own traditions. President Buhari made the matter worse by making Kachikwu, an IOC man, from Exxon Mobil, GMD and Minister of State of Petroleum. On the surface of it, the impression was created that he could generate policies as he deemed fit, enjoy direct access to the Minister of Petroleum and gain the authorization to implement the same policies as he liked. From day one, Kachikwu was thus a marked man within the Ministry of Petroleum system. It will be naïve to assume that it is only Maikanti Baru that is fighting him. It will be safer to assume that it is the establishment that is trying to cut him down to size. If you doubt that, then check the history of the system: most of the former Ministers of Petroleum that managed to do well are not even from the system but complete outsiders. Caught in the middle of this conflict, Kachikwu does not want to take the matter lying low. He is fighting back. I’ll comment on whether that is a smart or clever move anon.

I think the other problem signposted so far in this matter, is the role of the Minister of State and the substantive Minister and how power and responsibility are delegated along the reporting lines. The related issue is access to the delegating authority. What we know is that the Minister of State in the Nigerian system has always faced difficulties. He or she occupies the same space in the power spectrum similar to that of a Deputy Governor, even if he or she does not have any Constitutional right of succession, in the event of the death or impeachment of the substantive officer. So serious is this matter that when certain Ministers of State were treated shabbily in the past they had to protest, and force the issue. The Nigerian Constitution, in line with the Federal Character Principle, says there must be a Minister from every state of the Federation. Since it would make no sense to have 36 Federal Ministries, some Ministers end up as Deputy Ministers, but in reality, they are expected to report to a substantive Minister representing another state! The result has been nothing but conflict.

Under President Umaru Yar’Adua, the then Secretary to the Federal Government had to issue a memo dividing functions and responsibilities between Ministers and Ministers of State. Under President Goodluck Jonathan, there were three Ministers in the Ministry of Foreign Affairs representing different states of the Federation: their functions had to be spelled out to avoid conflict. This was also done in the Ministry of Health between Onyebuchi Chukwu and Muhammed Ali Pate, but one of the unwritten reasons why Pate eventually left the government was that he didn’t like the assigned role of a subordinate.

At a time, not even Rilwan Lukman and Odein Ajumogobia could work together. In Kachikwu’s case, he faced a humiliating situation whereby the GMD of a parastatal under his Ministry seemd to have better access to the substantive Minister and President. For months, the Minister of State could not access his principal, but the GMD of NNPC could, and that must have made him feel really bad. The truth is that the oil and gas sector is Nigeria’s honey pot and every GMD of NNPC has always enjoyed both official and unofficial access to the President. As I said earlier, only Diezani Allison-Madueke could keep her NNPC GMDs in effective check. If they stepped out of line, they lost their job.

Nonetheless, the President of the Federal Republic of Nigeria does not have to be the Minister of Petroleum of Nigeria. At face value, the President seeing that the oil and gas sector is the honey pot of Nigeria may want to supervise it directly. Oil generates close to 80% of Nigeria’s foreign exchange. Even a President who does not hold on to that portfolio will be tempted to keep a close eye on that. In President Buhari’s case, he had been a Minister of Petroleum in the past and chairman of the Petroleum Trust Fund. All of this when new players in the industry were in kindergarten class, and so it can be assumed that he knows much about the industry. But the President being the Minister of Petroleum creates exactly the kind of crisis that we are witnessing. The President is the final authority.

Whoever is appointed Minister of Petroleum Resources exercises in any case, delegated authority. Both the Petroleum Act and the NNPC Act further vest authority in the Minister of Petroleum Resources exercising delegated authority. When the President combines the positions of President, Minister of Petroleum and Chairman of the Executive Council, and memos by all Ministers are to be processed through the Council, the President turns himself in the case of the Petroleum Ministry into a mini-god over Nigeria’s honeypot. If the President acting as Minister presents a Memo to Council, it is most unlikely that anyone among his own appointees will oppose that memo. The memo ordinarily receives automatic approval, no matter how it may be. NNPC GMDs from Obasanjo’s time have tried to exploit this, when given that advantage, and it is why the NNPC’s response to Ibe Kachikwu now in the public domain is so troubling. Baru quotes the law. He insists that he has followed due process in all that he has done. He merely exploits the loopholes within the system that work perfectly in his favour under the present arrangement.

In his opportunistic statement released yesterday, he quotes NNPC’s alleged fidelity to the Procurement Act, and why and how the NNPC Group Executive Council does not have to report to a Minister of State, but the Minister or the Federal Executive Council. Mr Baru should be told that due process is not the only issue raised in Dr Kachikwu’s memo. He raised issues about the appointment and deployment of NNPC Executives and the appointment of COOs. Is that part of the mandate of the BPP? So, why should we have a Board that cannot perform oversight functions? The truth is that in many government departments, the chief executives often undermine the Board, especially if they are as powerful as an NNPC GMD who wields enormous influence and goodwill, as he wishes. On his part, Dr Kachikwu himself ruins his own case when he begins to talk about his being pro-North and his father having served in the North. What is that all about? It is completely immaterial. When a serving Minister begins to justify his own Nigerianness on the grounds of being pro-north, then we get closer to the root of the problem with Nigeria. Is Kachikwu also trying to play smart, to protect himself strategically?

Kachikwu and Baru have created significant mess in the petroleum industry due to their own conflicts. With due respect, that is the truth and the situation. It is a conflict that must be resolved in the national interest and the buck for doing that stops at the President’s table. This particular conflict, and other intra-governmental conflicts before now, almost becoming recurring decimals: EFCC vs NIA, DSS vs. EFCC, Babachir Lawal and NIA probe, the Senate and the Inspector General of Police, have altogether dramatized to the international community cracks within this administration, and a growing governance crisis. President Buhari has a responsibility to rescue his administration from the same odium that has often compromised Nigeria’s most strategic revenue sector. So far, he has not done so, and his failure will be remembered appropriately, if not now, then at the right time. It is tragic.

The National Assembly also probably has a role to play, beyond claiming it would look into the allegations that have been raised. The Senate has since separated the Petroleum Industry Governance Bill into three sections. It has passed the Administrative Section. But it would appear that the key issues in that industry would be both the Fiscal Regime and the local community frameworks. Administrative reform is not enough, and may even cause more serious problems such as we are witnessing. However, more probing questions have to be asked for the benefit of the divided public: how many NNPC contracts have been tabled before the FEC in the last two years, and what is their status? There is more to this matter than we know.