ABUJA — THE Senate Committee on Petroleum (Upstream) yesterday threatened to drag Engr. Funsho Kupolokun, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) to the Economic and Financial Crimes Commission (EFCC) for alleged financial misdeeds.
The threat came as the NNPC boss acquitted his management of the allegations just as he revealed the NNPC’s resolution to uphold the government’s plans of boosting local contents in the oil industry. The Senate Committee was particularly peeved by Engr. Kupolokun’s assertion that there could be no corruption in the award of NNPC contracts.
At the height of the allegations made by the committee against Engr. Kupolokun yesterday was his alleged collaboration in obtaining an additional $600 million in addition to $3.2 billion approved for joint venture operations despite his earlier assertion that the approved JVC budget would be sufficient.
Senator Lee Maeba, chairman of the Senate Committee on Petroleum (Upstream) who presided at yesterday’s hearing also accused NNPC of collaborating in heaping lowly qualified foreigners on the oil industry. The GMD who attended the hearing with senior officials of the NNPC sat through the hearings as Senator Maeba read out the allegations and at one point burst out laughing as he was accused of collaborating with Intels (Nig) Ltd. in fixing tariff for the local oil industry.
“When we get the submissions of the Group Managing Director we can look at our records and see what goes wrong. The Committee also decided that it also has the mandate of the Economic and Financial Crimes Commission if we don’t have good explanations,” Senator Maeba said. Maeba, however, admitted that a number of the contentious contracts were awarded before the advent of Engr. Kupolokun last year.
Responding, Engr. Kupolokun promised to present a written response to the issues highlighted by the committee saying that he only received the latest correspondence last week. He merely presented a verbal response to some of the allegations. The GMD defended NNPC’s local content policy saying that the present management has done far more than its predecessors in inputing local content into the industry.
He cited the Agbami project whose contract was approved by the NNPC board last Tuesday with a stipulation that at least 40% of the inputs be procured locally.
“The local content in Agbami is 40% and Agbami is the largest single project the industry has ever handled. The contract was approved by the board of NNPC only on Tuesday last week and we insisted on 40% local content.”
Besides, the GMD said the fabrication would be handled in Lagos by Nigerdock. He also dismissed the allegation of inflation of the Bonga field project.
“I was not in NNPC when the Bonga contract was awarded, but I will plead that it is not possible for a contract of that nature to be fraudulently awarded. The reason is that for the contract to get awarded, the board of Shell will have to come in and make a recommendation. It will then come to the NNPC board.”
On the allegation of privately raising a $600 million loan for joint venture operations, he said:
“The budget that NNPC agreed to and felt would be good enough to fund the industry was $4.9 billion, that is the government share of the funding. This was presented to the office of the Special Adviser at the time and the position we took was that $4.4 billion would be enough and jointly the ministry and the NNPC passed it on to the Ministry of Finance, but however, government in his wisdom decided that as a result of competing needs for funds, all that government could approve was $3.2 billion.”
“Between what the industry will need minimally and the $3.2 billion was a resource gap of $600 million. So, we came to the National Assembly and the first thing was to get the approval for $3.2 billion.”
“However, the industry has to grow. We have said that we must move from current 2.8 million production capacity to 4.1 million barrel per day by 2007. Reserves must grow from 34 billion barrels to 36, 37 billion barrels by 2007.”
“If we must do all this, some minimal work programme has to be carried out and we found out that we would require some $3.8 billion, that is a gap of $.6 billion.”
“The truth of course is that we could decide to under-fund and if we under-fund, what would happen is that production would decline rapidly and that leaves us in the middle of nowhere and the gap of $600 million needs to be found from somewhere and the only means to do it is to go for alternative funding scheme.”
