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Delta militants threaten oil shut down over $4.8 billion of illegal contracts in regional development agency

Accused of making political payments with agency funds, minister flies to region to dampen down tensions

Niger Delta militant leader Government Ekpemupolo, also known as Tompolo, issued an ultimatum to President Muhammadu Buhari and Niger Delta minister Godswill Akpabio. Appoint a substantive board for the Niger Delta Development Commission (NDDC) within seven days or face a breakdown of law and order in this critical oil-producing region, he said. That would involve shutting down the state oil company's flow stations, its crude oil pipelines and oil wells. Militants claimed the action would halt crude oil exports and gas supplies to power stations.

The deadline, initially due to expire on 6 June, has been extended until the end of the month. At the heart of Tompolo's demands are wide-ranging reports on corruption at the heart of the NDDC, the fourth biggest state agency in Nigeria.

Set up in 2000 to finance the development of the region and the remediation of environmental damage caused by oil production, the agency has been plagued by political rows and claims of mismanagement. Some local politicians say much of the funding has been channeled into the coffers of successive ruling parties in Abuja. Despite the country's economic doldrums, the illicit funding has increased in recent years (AC Vol 62 No 9, Oil reform gathers pace  & AC Vol 62 No 4, Shell retreats from the Delta).

The NDDC receives direct subventions from central government and from international oil companies, which means they have a duty of transparency in the use of funds under 'publish what you pay' rules.

Officials with access to the accounts of the agency told Africa Confidential that some 2 trillion naira ($4.8bn) worth of emergency and road and de-silting contracts were illegally awarded by the NDDC between 2016 and 2019.

Stung by the ultimatum, Delta Minister Akpabio flew to the Osubi airstrip near Warri in Delta State on 3 June to meet local politicians, traditional leaders and representatives of the Ijaw, Isoko, Ndokawa and Itsekiri peoples. The meeting started inauspiciously, with militant leaders accusing Akpabio of malfeasance, diverting resources that were rightly due to the Delta.

The following morning, Akpabio met Tompolo, lowering the temperature a few degrees. Akpabio promised Tompolo that he would immediately start the process of constituting a substantive board for the NDDC.

That was enough to postpone the deadline, but it is far from settling the matter. There is no clear plan to regularise the management of the NDDC's finances. Internal accounting documents suggest its total liabilities could exceed N3trillion with no capacity to repay them (AC Vol 61 No 20, How to make oil pay).

Since December 2020, the NDDC has been run by a sole administrator, Akwa Effiong, appointed by Buhari and Akpabio. In this role Effiong, in consultation with his close ally Akpabio, controls who gets paid and when. Before this, Effiong was acting executive director for the agency.

Critics of Effiong's and Akpabio's management say that creditors, who have been awarded over-priced emergency contracts, are offered a negotiated settlement – usually between 30-50% of the stated value of the contract – to speed the clearance of the backlog.

In 2018, they say, 80% of the NDDC's payments were made to settle 'emergency contracts'; in 2019-21 the figure has risen to 90%. At the same time, bills for regular projects are not being paid. An internal report seen by Africa Confidential claims that 20,000 workers have been laid off by companies which haven't been paid.

It adds that the 'emergency contracts' breach public procurement rules. Yet no action has been taken to address this. Instead, Akpabio has launched extended forensic audits of the NDDC, none of which have resulted in action against officials or contractors accused of fraud.

With three weeks to run before Tompolo's next deadline, Akpabio says he will fast-track the setting up of a new board. The composition of that board could start another argument.

On 1 November 2019, the Senate in Abuja confirmed all the nominees for a new board at the NDDC but Akpabio has been blocking its appointment on the grounds that the numerous forensic audits he has commissioned should report first.

Some insiders suspect that Akpabio has his own preferred list of candidates for the NDDC board and wants to throw out some or all of the candidates approved by the Senate in 2019. It could take another six months to get a new board confirmed by the National Assembly.

For now, payments on the emergency contracts are likely to continue, triggering more threats and uncertainty about oil production when the country is trying to boost export revenues after last year's pandemic price crash.

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