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'$6.2b paid to unknown firms for power projects'

Posted by From John-Abba Ogbodo and Alifa Daniel, Abuja on 2008/03/18 | Views: 2822 |

'$6.2b paid to unknown firms for power projects'


ANOTHER startling disclosure was made in Abuja yesterday by the House of Representatives Committee on Power and Steel which is investigating the huge amount of money spent on revitalization of the energy sector in the country between 1999 and 2007.

ANOTHER startling disclosure was made in Abuja yesterday by the House of Representatives Committee on Power and Steel which is investigating the huge amount of money spent on revitalization of the energy sector in the country between 1999 and 2007. The panel of the Lower Chamber of the National Assembly announced that S6.2b was paid to contractors that have no record of registration at the Corporate Affairs Commission (CAC) under the National Integrated Power Projects (NIPP) programme.

At the hearing also, former Minister of Power and Steel, Senator Lyel Imoke, who is now Cross River State governor, gave an account of his role in the programme, saying that he left the ministry in a good shape.

But his predecessor in office, Governor Segun Agagu of Ondo State, asked the panel to hold bureaucrats in the ministry responsible for the lapses in the award of some contracts.

The chairman of the committee, Godwin Ndidi Elumelu, at the resumed sitting of the panel yesterday announced that a group under the aegis of National Watchers, had gone to an Abuja High Court asking the court to compel the panel to mention the names of the unregistered firms that benefited from the NIPP contracts to the tune of S6 billion.

He said the committee was in possession of a court order to that effect and he proceeded to mention the firms as follows; Special Projects, Matdol, Zumo, Trakis, Acqua Combined, Akpo Int, Loomash, Aktra, Charley B Ceremic, Alfa DDL, Tee Unique, Earnesco Galv, NTTC, Space Master, Eternity Tajkay,Elektrak and Tee-Unique. The list also included Suchu Chase, Sassy Fund, Unihead Nig. Ltd., Riverroacks, Danelec, Pauwells, Felden, Network, Ikelomu Group and Bristosin. Others included International Mercha, Chrisob, Bangasa, Aolat Nig. Litd., Chris Ejik Int. Ltd and Aolat Nig. Ltd.

"Here, we believe in the rule of law and since I have a court order to mention the names of the companies that benefited from the contracts and they are not registered with the CAC, I have no choice than to comply", he said.

In his testimony, Imoke said it was unfortunate that so much money had been sunk into the power sector and there was not much to show for it.

"It is vexatious that so much was spent on the power sector, there is the impression that the money went into private pockets. Increasing power supply is capital intensive. According to the US energy info, it costs approximately 600,000 US dollars to produce 1 megawatt of electricity.

It estimates that it takes three years to build a gas fire power station.

"The Power project can deliver electricity until when it is completed and connected to the national grid. It takes three years to build thermal capacity, in the last few days the national consciousness has been fever pitch on the amount spent on power sector. The AGF has resolved the amount. He clarified the amount spent and they are backed by warrant."

"The NIPP was the largest power initiative in the world as at that time designed to address a major challenge in the sector. The resolution of the problem can only be achieved by an articulated programme."

Tracing the genesis of his involvement in the power sector, he said: "I was drafted into the Technical board in early 2000. The country before then was in darkness for six days because there was no light in the country in March 2000. It was the lowest ebb in our power and the President set up the committee. I pray that we don't go back to that date.

The approach was to repair dilapidated machines.

"There were 79 generating units in NEPA but only 19 were working.

By the time we left, 44 units were working and connected to the national grid.

Shiroro was the last built in 1987 and since then the Nigeria economy has grown by more than 50 per cent and we have still not realised the importance to the power sector. We had two approaches, one was rehabilitation.

"By year 2001 Nigeria generated 2600 MW in July of 2001. We celebrated it. A lot of what we call power generation plants are obsolete machines.

Our power stations are all old. There is no new power station. Egbin was completed around 23 years, Delta Power Station 23, Ugheli 20, kainji 40 years ago and Jebba is about 30 years old. All these are supposed to be delivering power daily."

He said the root of the problem was that in the case of NEPA, no overhaul was carried out.

His words: "They did not overhaul. They allowed it to get down. The system did not keep the maintenance schedule. We did not make provision for the economy that was growing.

"For us the challenge was to rehabilitate the generation from 1500 MW to 4000MW. The record of the PHCN will show you what was achieved. AFAM 1,2,3 and 4 had zero capacity. On paper it had 976. But when we resumed, it generated zero. By the time we left we had fixed it (Afam 5). It was delivering and also rehabilitated the fifth unit. I need to do that so that the issue of money wasted will be put in a better perspective.

"Delta Power station was built in the 60s. Some were even constructed in the 50s and one was obsolete and could not be rehabilitated. We rehabilitated Delta 2 and 3 to the national grid."

The former minister said he did some radical overhaul in NEPA which led to improvement in the Internally Generated Revenue that was being used to settle salaries, pension and gratuities.

He went on: "Cash collection was in the region of N1.9 billion when I left it was well over N6 billion. These funds were applied towards the salary of NEPA staff and not on NIPPS alone. The point is that the investment did not go down the drain. In that intervening period, generation capacity was consistent from 1900MW to 3000 MW and we broke the record by delivering 3500MW."

On the way out of the problem of power in the country, he said there was no short cut advising that government should not completely leave everything to privatization. He said: "There is no quick fix to the rehabilitation of the plants. Short of new plants, transmission is the way out.

"I believe in privatisation. But the power sector is a peculiar sector. If we bring in the private sector, the tariffs will increase and we have to consider this."

"Faced with the challenges if you don't add to the capacities it will appear that nothing has been done. There was need that beyond Omotosho, Papalanto and Geregu we needed more."

He lamented that despite Nigeria's ranking as the sixth largest producer of gas, not much benefit had accrued from it, stressing that the country was not in control of the resource since everything had been tied to investment of the multinational companies.

He further said: "We are the 6th largest producers of gas but we don't have enough gas to fire our stations.

All the gas discovered is committed by the oil companies. They are powerful. For the next 25 years, all the gas in Nigeria has been sold and there was no gas to solve our domestic needs. They make much money and make money. Even if we put the NIPP on top of the gas we still don't have gas."

He also defended the location of the NIPP projects in the Niger Delta, saying proximity to sources of gas was considered but they would supply power to all parts of the country.

"They were not designed for the Niger Delta but to solve the problem. The location of power does not disturb the place it is delivered. The power plant is built and evacuated to other areas. They were located close to the source of gas. We have one national grid in Nigeria and unfortunately for us it is not complete, because we have not been able to complete the national grid. So we had the objective of completing it and creating a robust national grid."

Imoke said the projects had been misconstrued, explaining that the funds used for the project did not belong to federal government alone: "There have been a lot of misconceptions on the NIPP. Mr President convened a meeting of NEC chaired by the VP. But on this occasion the then President attended the meeting where he expressed concern about the need to generate new capacity and he decided that the NIPP should be funded by the Excess Crude Account.

"The money belonged to the three tiers of government. He also convened a meeting with ALGON representatives and sought their buying into the project. It was presented as a project that belonged to the three tiers of government and not NEPA or Ministry and as such a company had to be set up with all the three tiers which gave room to the Niger Delta Power Holding Company. A holding company was set up to hold the assets before the occasioning and when sold be refunded to the three tiers and NIPP has no MD .. It has a Project management team. Everybody in that team is a staff of PHCN.

"The NIPP project manager is CNO Nwachukwu and a competent , He is the most competent man and the head of Transmission . Okonkwo is the head of Distribution and the most competent. He is still in NEPA.

"The VP chaired the committee that was set up by the President. The committee to implement the project was chaired by the VP and the state governors and one governor from each of the geo political zones and a representative of the ALGON. The committee met several times and issued instruction to my committee several times. NNPC Finance Economic Adviser and al belonged to this committee and they all superintended to the EXCESS crude."

He said the face-off between former President Olusegun Obasanjo and (Vice President) Atiku Abubakar made the committee to channel everything about NIPP to the Federal Executive Council (FEC) for approval.

"Towards the end of the administration there were differences between OBJ and Atiku and all the approval had to be taken to the FEC and all the projects were approved by the FEC," he said.

He, however, said that all the equipment ordered, especially, the gas turbines had been delivered. All the 18 turbines have since been delivered and they are at our ports and they have not been installed but they are not installed because of the problems.

The former minister also spoke on the Mambila power project saying that a fresh initiative should be taken to revive it.

Asked by the committee on the way forward, he said: "It is important we look at the Power Reform Act of 2005. Under the act, we had to set up several agencies and it is important the committee look at the current structure and find out better ways they can perform .

"We still need to follow the reform plan. $3.2bn is a small fraction of what is required to solve the power problem of the sector. We need to look at manpower structure to improve in the sector. We have a real challenge to improve our power sector. South Africa is investing $21 billion. Our total commitment was in this project and I believe we did it with the best intention and we did it without focusing on the lining of our pockets."

He concluded that every step taken on the projects was in order: "No contractor was mobilised beyond the advance payment as approved by the FEC and supported by a guarantee to the project. Even if I may just state the process, at that time there was an issue of (how) can we complete this project after the Due Process and the approval of the FEC .

"The documents were prepared by the NIPP office and submitted to the Ministry of Finance which then sent to the Office of the Accountant-General and then returned to the Ministry of Finance before LC were opened.

"Each contract has an Advanced Payment Guarantee that can be called upon. As at the time I left office the NIPP projects had not reached the stage that the contractors could be drawing large sums of money. Such payments could only be made when progress have been assessed.

"If any of the contractors has absconded why has the Federal Government not called on the Guarantee Bond? Unfortunately for us 100 per cent of the equipment are purchased offshore. Construction is done locally. Construction in some cases consists of only 20 per cent of the total job to be done. Procurement is the largest component of the contract.

"We will get zero value on NIPP until all the projects under the NIPP are completed in the country."

Dr. Agagu lamented the power situation but cautioned that people should not say nothing had been done at all.

"The power situation leaves much to be desired but it is not true to say nothing has been achieved. The Federal Government has not invested enough or done enough to bring in investment as done in other countries. Privatization should be looked into," he said.

The governor said his ministry made efforts and a certain level of success was achieved.

According to him: "In terms of actual power generated, we got to 4000megawatts. In terms of actual power injected into the system, we got to 3600 because you cannot transmit every unit generated. There will be technical loss. Papalanto and Omotosho and Gereku have been completed but are not contributing anything to the national grid. They were to be completed in 18 months in 2005 if we pursued things the way they ought to. This is 2008, yet they have not been completed. Gas available can only serve two of the eight gas turbines in Papalanto. We are shortchanging ourselves. We should clean up immediately. Each of the plants would cost $150 million. We have no reason not to complete the gas pipeline that would take, may be, $2 million. If we do the right thing, we will have 1000megawatts of new electricity," he declared.

The governor said there was need to give the issue of power a serious attention, stressing that even $16 billion was still a far cry: "?16 billion wont be enough to supply Nigerians with the much needed power. Somebody must be held accountable for not making enough money available."

When the committee talked about mismanagement of funds, Agagu who kept telling that he needed to be understood properly said the anti-corruption agencies could be asked to investigate.

He remarked: "I have not carried out an audit on this. If at the end of the day that is your verdict, I don't have any problem with that. We need to avoid generalisations. It is possible some money has been misappropriated, if money has been misapplied. There are various ways to find out if it is; EFCC, ICPC. What I am still saying is that enough money has not been appropriated to this sector. The $16 billion we are talking about cannot take us to

anywhere. There has been Power Committee in the NASS over the last eight years and why haven't they dictated about the problem with the gas pipelines, let them find out.

Speaking on the allegation that contracts were given to companies not registered by CAC, the governor said the bureaucracy of the ministry should be blamed because he relied on the brief given to him. He said: "It is possible. This is how companies get jobs when tenders are advertised. The minister is not a member of the tenders board. The tenders board recommends and I approve. No minister would have the to look into the registration of companies. I don't think any minister would be dutiful enough to do that; there are technical people who do that. The bureaucracy does that. Our bureaucracy should be looked into. Even in season of crisis the bureaucracy drives government and drives it well.

"I was the Head of the Ministry so the bulk stops on my table. There is a government procurement circular on the mode of awarding contracts and it is the ministry officials who determine who gets the job. What the Minister receives is a brief. That is the job of bureaucracy and for you to survive on this job you must take certain things for granted.

"We must go and look for the one who did that and not the Minister who was in charge then. As minister, my approval limit was N20 million; anything above that is for the FEC. So those below the N20 million, I signed."

Central Bank of Nigeria (CBN) Governor, Prof. Chukwuma Soludo, who also appeared before the committee said it had not much role to play in the NIPP projects because it only acts a banker to the Federal Government.

He said: "I need to explain something . The CBN acts as bankers to the Federal Government. The duty of CBN to the FG is not too different from the job of the commercial banks. If you write a cheque you know why you have written the cheque.

"In this case when we receive the mandate we receive the purpose. When we receive such we send it back to the Accountant-General of the Federation and then he reconfirms and we get back to the minister.

"On the difference, we paid only what I told you. There could be other payments that were not paid but by the commercial banks for other contract."

The Nigerian Society of Engineers wrote to the committee to make a case for its members.

The engineers said: "If the proper thing was done over the years we wont be in the mess that we are in. When there was no money the engineers were allowed to run the projects and when money now came, they started having committees and they ran it the way they have done.

"Jobs far lower than N500 million have been run by even the foreign companies. We over-rate the foreign engineers and down grade the local engineers. I plead with you please do the right thing so that those who are involved must be punished. If you punish the Nigerian engineers involved, we will also punish them in our own way."

Relatedly, former Vice President Atiku Abubakar declared yesterday that he had no hand in the award of contracts for the sector under NIPP scheme.

According to the Atiku Campaign Organisation (ACO) yesterday in a statement, he washed his hands off the projects "when he discovered that former President Olusegun Obasanjo wanted to use the committee only to rubberstamp contracts already approved by him without consultations with its members."

Imoke had also told the panel yesterday that following the thawing of relationship between Obasanjo and Atiku, the former withdrew from matters relating to the projects.

Imoke said he thought it was about $6 billion, adding however, that the less than $4 billion announced by the accountant-general remained the authoritative figure.

Yar'Adua had told a World Bank delegation that $10 billion was spent with no commensurate benefits in the sector; but the House of Representatives Speaker Dimeji Bankole said it was $16 billion; Senator Ben Obi told The Guardian in a recent interview that it was $15 billion, but the Accountant- General of the Federation put the amount at less than $4 billion.

A body known as the Power Sector Watchers Group had, in a statement last week, frowned at the conflicting figures, stressing that it was more important to tell Nigerians why there was epileptic power supply. It added that President Yar'Adua should recall his Senior Special Assistant, Foluseke Shomolu, who was sacked for writing a memo to another presidential aide correcting the figure and putting the actual amount spent on power at $5.16 billion.

But Atiku's campaign outfit said yesterday: "The Atiku Campaign categorically denies any such move by the probe panel as it is well known that the former Vice President played no role whatsoever in the initiation and award of the controversial power contracts.

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Fay(Katy, Texas, US)says...

Actually translates to bravehearted.