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Why N16bn power projects failed –Contractor

Posted by By JAMES OJO, Abuja. on 2008/04/06 | Views: 1088 |

Why N16bn power projects failed –Contractor


Power tussle between Power Holding Company of Nigeria (PHCN), the National Integrated Power Project (NIPP), the Niger Delta Power Holding Company (NDPHC), and the Ministry of Power and Steel has been identified as a clog in the wheel of Federal Government efforts at revamping the power sector.

Power tussle between Power Holding Company of Nigeria (PHCN), the National Integrated Power Project (NIPP), the Niger Delta Power Holding Company (NDPHC), and the Ministry of Power and Steel has been identified as a clog in the wheel of Federal Government efforts at revamping the power sector.

The administration of President Olusegun Obasanjo had spent a whooping $16billion on the energy sector between 1999 and 2007, but with no improvement in power supply, prompting the House of Representatives to mandate its Committee on Power and Steel to investigate what went wrong.

Armed with situation reports from NIPP and PHCN, the Ndidi Elumelu-led committee last week undertook tour of power projects in the South -South zone, where it discovered sharp disparity in the level of work done by contractors and the payment made so far by government.

One of the main contractors building thermal plants for NIPP, Managing Director of Rockson Engineering, Akinola Arumeni-Johnson, told journalists at one of the sites in Rivers State that the hiccups that characterized the execution of power project contracts were not unconnected with the struggle for supremacy among agencies of government supervising the projects.
Lack of proper coordination among the agencies floated by the Federal Government, including the Power Holding Company of Nigeria (PHCN), Niger Delta Power Holding Company (NDPHC) and the officials of NIPP, was also identified as responsible for the poor execution and control over the NIPP projects.

According to him, the three agencies had been working at cross purposes, were suspicious of one another at the expense of the major contracts signed by them for the improvement of electricity in Nigeria.
Consultants to the various projects who were foreigners, he observed, capitalized on the unhealthy rivalry to turn themselves to demigods with nobody to protect the interest of Nigerians in the execution of the contracts.

He blamed the problem on government’s decision to carve the NIPP from the nucleus of PHCN managers, which led to keen rivalries among officials of both agencies, particularly on modalities for handling the NIPP projects.
Both PHCN and NIPP succeeded in confusing the Elumelu committee by preparing conflicting progress reports on work done by the contractors handling the power projects.
Arumeni-Johnson, an engineer, lamented that indigenous contractors were discriminated against in payment of statutory advanced payment and in the opening of letter of credit, while foreign owned companies and consultants were pampered.

Beside the discrimination, Rockson, which is handling the installation of turbines and building of power stations in Alaoji in Abia State, Omoku in Rivers State and Gbarain –Ubie in Bayelsa State, also blamed the poor response by government to contractors’ demands on fast tracking the execution of the power projects as another stumbling block.

Contracts for most of the power projects were awarded in 2006, with completion date fixed for between 2007 and 2009, but when the committee undertook an assessment tour of the projects in the six states of the South –South, most of them were still at foundation level, with the exception of Alaoji, which work has progressed above the foundation stage.

Even with an appreciable work at Alaoji, Arumeni-Johnson still blamed the Ministries of Power and Steel and Works for allegedly slowing down the zeal of its company to feed close to 2000 megawatts of electricity into the national grid from the turbines it had imported into Nigeria.
He said that his company could not understand the double standards of the government agencies in dealing with contractors, pointing out that while Chinese companies received full payment of contract sum, Nigerian companies were not paid in full.

The Rockson Engineering boss also lamented that the ministries did not pay compensation to land owners in areas where the plants were sited at the right time, leading to delay to commence work.
“Federal Government has not fulfilled its part of the contract agreement, we are yet to receive the 25 per cent advanced payment in full, land for the project is not free from encumbrances. Take the Alaoji power plant, for instance, the movement of turbines to the site from Onne port is delayed because of the bridge on Imo River that could not take the 200 tonnes turbine and the Ministry of Works is not ready to provide alternatives, whereas, the issue of the bridge was captured in the agreement,” Arumeni-Johnson said.

He added that his company had to advance a loan of N164 million to the PHCN to pay compensation for the 61 hectares of land where the Alaoji plant was sited.
From Alaoji site, he said that the company had the capacity to generate 1,074 megawatts, Egbema in Rivers State, 338 megawatts, 225 from Gbarain-Ubie and 250 megawatts from Omoku, all of which he said would be fed into the national grid after each of the projects had been completed.

The Rockson Engineering boss, who also owns Arik Airline, said he had been involved in power projects since 1976 in North Sea, United Kingdom and noted that the NIPP projects as initially conceived were to generate 4,000 megawatts of electricity for Nigeria, whereas, the current electricity supply by PHCN has drastically dropped to about 1,200 megawatts, which, he said, precipitated crisis within the energy sector in the country.

He lamented that the government had failed to attend to the immediate requests by some of the contractors as well as to authorize the use of its facilities and recourses for movement of turbines from the sea ports where they had been lying fallow, to the appropriate sites where they would be installed.

Since 2006, he said that Rockson had applied to the Federal Government for an alternative means of transporting four turbines from Onne for installation at the appropriate site, only for the government to turn down the request without a convincing reason.

The House of Representatives committee was shown four of the turbines imported since 2006 but lying in waste at the sea port owing to the difficulties involved in moving them across the Imo River, but Arumeni told them that the alternative approach being contemplated was to build a ramp, at a cost of N2.5billion to move the turbines and the accessories.

Federal Government, he said, had consistently refused to offer a helping hand in that regard, whereas it has been showing specific preferences to foreign contractors handling the NIPP contracts to the detriment of local engineers, whom, he noted, have been displaying better technical competence than most of the foreign contractors.

As the time of visit of the committee, he said government owed more than $50million on some of the NIPP jobs, arising from variation in contracts agreement such as relocation of sites, fulfilling pledges made to communities like sinking of boreholes and renovation of schools.

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Okfold(Sobe, Edo, Nigeria)says...

I want the meaning of female owan name Ekeke (Edo state)

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Toluwalase Samuel Olufemi(Ijebu, Ogun, Nigeria)says...

Authority belongs to God, once He decrees it is final and binding

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Ikponmwosa Osamede(Edo, Nigeria)says...

Your meaning of Osamede is wrong. Osamede means God has given me a crown