A dreadful mix of official dishonesty, cluelesness and inertia continues to stymie progress in the nation’s power sector
By Bamidele Johnson
In July 2007, the Manufacturers Association of Nigeria, MAN, submitted a document to the Presidency, detailing a very crucial need. The document showed that the association’s 1,500 members did not need more than 864 Megawatts (MW) of electricty to achieve a far greater level of capacity at a more efficient cost.
At the time the document was sent to the Presidency, MAN members had generators with an aggregate capacity of about 600MW. On a weekly basis, the 1,500 companies needed 8.6million litres of diesel to run the generators.
Diesel, at that time, cost N90 per litre. MAN’s request was simple: that President Umar Yar’Adua should authorise that 864MW be taken from the national grid to take care of the manufacturing sector for 24 or at least, 16 hours.
It was a request that, if met, could have resulted in increased capacity to generate more jobs. Curiously, however, it was not. The government inherited 3,000MW from the Obasanjo administration in 2007. That figure has since shrunk to 1,600MW.
Later that year, Michelin, a French tyre manufacturing company, left Nigeria for Ghana, citing inclement business environment. Again, last December, Dunlop Nigeria plc, Michelin’s main rival in tyre production, also announced that it was discontinuing manufacturing and moving into real estate. The reason was the same as that of Michelin. Before then, Dunlop had scaled down its manufacturing operations, opting for tyre importation which employs far fewer than the latter.
In every part of the country, Nigerians have become exasperated with the acute shortage of electricity, which has lowered the quality of life and economic development. Most Nigerians now consider their petrol or diesel-fired generators as the main source of power, while the national grid is treated as a back-up.
For businesses, whether big or small, the cost of providing power has been the biggest impediment to profitability and competitiveness.
It had been so before the present administration took over. However, Yar’Adua raised Nigerians’ hopes that the power sector would get adequate attention, given its centrality to his government’s Vision 2020 programme, a declared intention to make the nation’s economy one of the 20 biggest in the world by the year 2020.
On account of the deplorable power situation, many have derided Vision 2020 as nothing more than an opthamological pun. It is difficult to disagree, given the gap between the government’s action and its oft-mouthed desire to fix the power problem .
During his campaign, Yar’Adua promised he would declare an emergency in the power sector within a hundred days in office. That promise went unfulfiled. After eight months in office, Yar’Adua set up a presidential committee on power, which he gave one year to turn in a report on how to fix the problem. Then came a flood of excuses for failure.
First, the government blamed the court order obtained by the Revenue Mobilisation Allocation and Fiscal Commission, which stopped withdrawals from the Excess Crude Account towards funding the National Integrated Power Project, NIPP, and the Mambila Hydroelectric Power Plant project in Adamawa State.
This was followed by a time-buying claim that there was a need to wait for the report of the Power Reform Committee, headed by Dr. Rilwan Lukman. The report was turned in and the excuse moved to two unnamed states that were yet to consent to the use of their share of the Excess Crude Account for the completion of the NIPP.
The excuses sowed doubts, which heightened with Yar’Adua’s appointment of Mrs. Fatima Balaraba Ibrahim, a masters degree holder in French Language, as Minister of State for Energy in charge of Power. When the administration marked one year in office, Yar’ Adua promised that the government would move faster in its bid to make lives better for citizens. The speed promised is yet to be seen, as the government continues to appear inert. However, Yar’Adua did manage to rouse Nigerians in 2008, when he declared that the Obasanjo administration expended $10bn on the power sector, particularly on the NIPP, with little to show for it.
The declaration stirred the House of Representatives Committee on Power and Steel, headed by Ndudi Elumelu, into probing expenditure on power generation, transmission and distribution between 1999 and 2007.The probe into the power projects, which were conceived to quickly generate 4,500MW, took attention away from the government’s failings, as the public was fed a daily staple of alleged infidelity in the award and execution of contracts. The public was further titilated when Dimeji Bankole, House Speaker, claimed that the actual amount spent on the power sector by the Obasanjo administration was $16billion.
The committee report relied on testimonies at public hearings and visits to NIPP project sites across the nation’s six geo-political zones. The delay in the submission of the report sparked controversy, with the House leadership alleging that powerful interests were responsible for the delay in submission and consideration by the House, while contractors claim that the committee had a predetermined outcome towards which it worked and also demanded bribes. Contractors accused committee members of receiving monetary inducements during their sittings and while touring project sites. There was an allegation that some members of the committee took N100million bribe from some of the contractors so as not to indict them in the report.
The allegations dented the credibilty of the probe. Committee Chairman, Elumelu, denied that members demanded bribes. “During that process, my committee was saddled with the responsibility of investigating the most publicised probe in the power sector from 1999 to 2007, and that duty was duly carried out… We have been deceiving ourselves on the power sector. This issue of talking about one year, three-year targets, etc is deceitful. Tell Nigerians the true situation of things. We are generating below 1000MW currently. Don’t mind what they are telling you,” he said angrily.
But it was not only the bribery allegation that punctured the fidelity of the report, which accused the Obasanjo administration of wasting $13billion in eight years. This is in addition to other commitments in the region of $12billion, which were not funded.“In a large number of instances, legal processes in the appropriation and release of funds for the power projects were circumvented. Projects costs were routinely and massively inflated, in a number of cases up to 1000 per cent. In about 50 per cent of the projects visited, contractors collected billions of naira and disappeared from project sites, while most project consultants maintained a conspiratorial silence,” the report said.
It also indicted Obasanjo, Dr. Olusegun Agagu, a former governor of Ondo State, and Mr. Liyel Imoke, Governor of Cross River State. Both were Ministers of Power at different times, and 17 other persons for mismanagement and recommended that they be called to “account for the recklessness in the power sector.”
Companies handling the projects were also indicted and accused of sabotage and non-performance. The report recommended a cancellation of NIPP contracts in Owerri, Yenagoa, Calabar, Maiduguri, Umuahia, Damaturu, Arochukwu and Ado-Ekiti on grounds of incompetence of the contractors. It also recommended that some of them be made to refund monies paid to them.The report alleged that Agagu oversaw the award of meaty contracts to some unregistered companies, which were also recommended for further investigations.
However, many observers have sneered at the recommendations of the report. This is based on the argument that the Committee should have engaged experts for preliminary assessments before starting the public hearing. Contractors also contend that the Committee is deficient in technical and engineering details of power plant building. They contend that power plants require years to build, as they are not bought off-the-rack like clothes in a boutique. To support their position, they pointed to the Nigerian Agip Oil Company power plant at Okpai that was built in four years. The contractors also cited the Egbin Thermal Power Plant, for which an agreement was signed in 1981, that started operating six years after. And unlike the NIPPs, the above mentioned did not experience problems of funding.
When it came into office, the Yar’Adua administration decided to stop funding the NIPPs, some of which were close to completion. “President Yar’Adua came in on 29, May 2007. By the first week of June, Mahmud Tukur, Chairman, Revenue Mobilisation and Allocation Commission, RMAFC, who was appointed by Obasanjo, went to court and got an injunction against government’s use of money from the excess crude account to fund projects. Forget about whether it was power, there are other projects. And the new government said it was a government of the rule of law, so it complied with the court injunction. So, the funding of the project stopped. People were just using whatever they have to do whatever they can do… Nobody has blamed Tukur for stopping the contracts from going on,” Wole Sowole of Chemo Technics, one of the contractors, said.
The government is already considering a reversal of its own policy of not using money from the Excess Crude Account, for which it criticised the former administration.
Other contractors also allege that the Committee did not consider other factors impeding the progress of the projects. These, they said, were adequately explained during the public hearings and visit to project sites. Hoquado Engineering, for example, was not able to mobilise to site because of hostility from the communities where the plants it is handling are located. The company had not paid compensation for land appropriated for the projects to the host communities at the time of the probe. An official of Rockson Engineering, which won the contract for Omoku Thermal Power Station in Rivers State, said work had progressed to between 45 and 60 per cent in the power plants being built by the company. The report accused the company of non-performance. A PHCN consultant also noted that the four turbines procured for the Alaoji Phase One Project, also handled by Rockson, could not be moved to site because the bridge over Imo River cannot bear their weight. This was corroborated by Hajia Fatima Ibrahim last year. But right now the Yar’Adua administration has not begun building the bridge.
Contractors also insist that they did not receive above 25 per cent advance payment to cover the onshore and offshore components of the funding. The balance of 75 per cent, they added, is in form of Letters of Credit in favour of manufacturers of the equipment to be used for construction. Each payment is also backed by bank guarantees. The Committee’s claim that over $13billion was spent between 1999 and 2007 also seem grossly exaggerated. Figures given by officials of the Federal Ministry of Finance, Auditor-General of the Federation and the Central Bank of Nigeria stand at between $6 and $7billion, with utilised and unutilised funds standing at $3.2billion. “Why was the committee desperate to put $13billion?” asked a contractor.
There are also allegations, by members, that Elumelu did not involve them in the writing of the report. Donald Egberibin, Muraina Ajibola, Chinyere Igwe and Ahmed Malik, all committee members, said they were not privy to the writing of the report. “We toured the sites together and conducted the public hearings together and should have made input into the report,” said Igwe.
The report is said to have been written by a PHCN contractor, who lost his bid for one of the contracts. Though the report affirmed that due process was abused in respect of payments under the NIP
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