How Yar’Adua’s probe affected electricity reform for two years • Jonathan commissions power plants two years behind schedule • Origin, context of exercise

THE Federal Government says it has shaken off the delay occasioned by different factors and is moving on with the National Integrated Power Projects (NIPP), though the scars still haunt the power sector.
And going by the timetable sighted by The Guardian Sunday, President Goodluck Jonathan is scheduled to commission the remaining plants built under the NIPP within the next few months.
He commissioned the 500 megawatts (MW) Omotosho power plant on October 19, 2013. Jonathan had on October 3 commissioned the 434MW Geregu 11 Power Station built by the three tiers of government under the Niger Delta Power Holding Company (NDPHC).
Geregu 11 is one of the generation schemes of NIPP, made up of 10 power stations. Others are Calabar (630MW), Egbema (378MW), Ihovbor (504MW), Gbarian (252MW), Sapele (504MW), Omokunu (252MW), Laoji (1076 MW), Olorunsogo (750MW) and Omotosho (500MW). About 5,000MW of electricity is expected from the plants.
The NIPP was conceived in 2004 under the then President Olusegun Obasanjo as a fast-track government-funded initiative to stabilise Nigeria’s electricity supply system while the private sector-led structure of the Electric Power Sector Reform Act (EPSRA) of 2005 took effect.
NIPP was originally designed around seven medium-sized gas- fired power stations in the gas-producing states, and the critical transmission infrastructure needed to evacuate the added power into the national grid. A commitment to electrify host communities in the vicinity of the power stations and major sub-stations gave rise to the distribution component of the project.
In August 2005, the National Council of State and the National Assembly approved an initial funding of $2.5 billion for NIPP from the ‘Excess Crude Oil Account’, which statutorily belongs to the federal, state and local governments. The Federal Government thereafter incorporated Niger Delta Power Holding Company Limited (NDPHC) as a limited liability company to serve as the legal vehicle to hold the NIPP assets using private sector-oriented best business practices.
But curiously, following the 2007 change in administration that brought in Alhaji Umaru Musa Yar’Adua as president at the federal level and in many states, the funding arrangements for NIPP were subjected to intensive legal, political and financial scrutiny, resulting in over two-year interruption in funding for the projects. The delay by the same PDP-led government affected even the General Electric’s (GE) equipment negotiated with some form of concession at the port. Insiders said “substantial parts of the equipment went bad at the port while the then Yar’Adua’s men were bickering over many projects, including the NIPP’s.”
By official Niger Delta Power Holding Company Limited (NDPHC) figures, at the time of the suspension, $2.8 billion was already invested in NIPP, including $1.78 billion in funded letters of credits which allowed some of the projects to continue despite the funding interruption. Contracted commitments totalled $7.385 billion.
After a protracted and intensive debate on the way forward, the National Economic Council (NEC) agreed later in 2008 to set aside an additional $5.375 billion from the ECOA as a Power Emergency Fund to complete NIPP subject to the approvals of all the state legislative houses. Most of the governors did not understand the processes and the urgency that required and so many state attorneys-general did not comply in good time as Lagos State was part of the early birds to comply.
To implement the decision, in January 2009, NEC inaugurated the NIPP Steering Council chaired by the then Vice President, Dr. Goodluck Ebele Jonathan, with six state governors and four federal ministers as members. It was set up by the then President Yar’Adua when the noise over how much was spent was going to derail the project.
The NIPP Steering Council is now the Board of Directors of NDPHC chaired by Vice President Namadi Sambo.
The late President Umaru Yar’Adua had stirred up the hornet’s nest when he said that “the government under President Olusegun Obasanjo wasted $10 billion on the NIPP with little or nothing to show for it.”
Then House of Representatives under Speaker Dimeji Bankole put his own figure at $16 billion and how that came about remains a mystery till date.
Bankole proceeded to set up a committee headed by Ndudi Elumelu to probe the billions of dollars spent on the independent power projects.
The projects were supposed to drastically increase power generation in Nigeria as well as improve transmission and distribution of the generated electricity.
Hardly had the committee finished its work when the House got enmeshed in controversy, thereby setting up another committee to review the report of the Elumelu-led committee.
At a visit to one of the supposed sites for the projects, the Elumelu’s committee described the projects as non-existent. Though the final report was not made public, there were several media reports which suggested that senior government officials under the former President Olusegun Obasanjo, including former Ministers of Power, Liyel Imoke, Governor of Cross River State and Olusegun Agagu, the late former Governor of Ondo State, were part of the Committee.
Then Senior Special Assistant to the President on Power Sector Reform, Foluseke Somolu, had earlier made efforts to clarify the figure to President Yar’Adua that the $10 billion being claimed was not accurate. He was promptly fired for his reported clarification conveyed to the President through the then Alhaji Tanimu Yakubu who was Chief Economic Adviser to the then President.
Somolu, who worked for President Obasanjo, had then worked for about six months with the late President Yar’Adua before the power sector controversy claimed his job.
In a memo to the then Chief Economic Adviser to Yar’Adua, Somolu noted: “As a member of the NEPA Technical Board (2000-2001), and having been closely associated with the power sector almost on a continuous basis since then, the figures that are available to me do not approximate anywhere near 10 billion USD.
“A tabulation of all funds released to NEPA/PHCN from 2000 to August 2007 indicates only N268.9b (=2.2b USD)… monies released to the National Integrated Power Project (NIPP) shows a total of N360.7b (=2.96b USD). The total of A and B is N629.6b (=5.16b USD at an exchange rate of N122 to one USD)”.
Obasanjo, in his reaction to the allegations and the probe, had expressed his readiness to face probe if found guilty, insisting that the probe was ill-conceived.
He stated that his government followed due process and owed no apology for embarking on the projects.
He said: “Now, after it is all said and done, the bottomline is that Nigerians need power and they need it now. Any delay is double jeopardy – there is loss to our economic and industrial growth and, every month that the contractors are wittingly or unwittingly prevented by whatever reason or excuse from embarking on their jobs, Nigeria will pay more.
“The hold-up and the delay that have attended the projects in the pipeline since May 2007 will, by my estimation, cause the nation not less than 25 per cent more by the time the works are completed. There is the danger that some of the equipment, particularly the turbines that are now at the port and elsewhere in the country may suffer deterioration if not kept in a special storage facility. And they may have to be replaced or refurbished at a very high cost before they can be installed.”
On the figures said to have been spent on the power projects, he stressed: “I have been told that the figure in this regard from 1999 to 2007 is in the region of $6.5 billion, including outstanding letters of credit. But whatever figure you choose to take, to say that there is little or nothing to show for it is the greatest understatement of the year, which will tend to portray inadequate knowledge or ignorance.
“From what I have said above, there are results to show for the expenditure. What is required is serious, adequate and committed follow-up and sustenance from where we stopped. If the total expenditure has not translated to power availability at our homes and for our industries, it is because the little additional expenditure that is necessary for completion or for sustenance has not been made.
“For example, if you spend $200 million on a power station and the switch gear costing less than half a million dollar is not installed, you will not get the benefit of the $200 million already invested. For the uninitiated, nothing has happened.”
A Presidential Review Panel on the NIPP set up by the National Economic Council (NEC) later clarified the issues and reported that only $3.08 billion was expended as against the figures announced the then President and House of Representatives. And the report of the committee headed by the then Vice President (now President Jonathan) confirmed exactly what Somolu had claimed that only $3,08 billion was spent. The CBN confirmed that what was budgeted was not what had been spent and the balance was in an account of the CBN.
The committee’s report was reportedly conveyed by Governor of Benue State, Gabriel Suswam, to a meeting of the National Executive Council.
Suswam, in his report, also identified intermittency and stoppage of funds as among the factors that helped to frustrate the implementation.
The committee identified lack of thorough feasibility studies as being responsible for several challenges of the projects in the area of transportation, water supply and transmission connections to the sites.
Suswam said: “Slow pace of surveys, enumeration work and payment to land-owners has impacted on site development. The projects also lacked clear and defined ownership structure/agreed responsibilities and it has resulted in a dis-jointed and unco-ordinated projects implementation”.
The committee agreed that completing the projects as initiated was the right way to go as it would be the only sure way to improve Nigeria’s power supply logjam and free its citizenry and businesses from the shackles of darkness.
At the commissioning of the Geregu 11 plant, Minister of Power, Chinedu Nebo, said that the power plant was constructed to bridge the gap in electricity supply in Nigeria.
He described Geregu 11 as one of the 10 NIPPs which are a clear manifestation of government’s commitment to the power sector. He noted that the power plant is expected to boost power supply in the country. Nebo stated: “Power generation has improved in the country with the contribution of the NIPPs contributing 1,600MW to the national grid. “Efforts are already being made by the Federal Government to carry out maintenance and overhaul the privatised power plants.
President Jonathan on his part described the successful completion of the Geregu 11 as government’s efforts to provide regular electricity in the country.
Jonathan disclosed that the government would be commissioning more power plants in the next few months.
He spoke on some of the challenges faced by the NIPP.
His words: “ It is gratifying to note that the NIPP projects were stalled for two years when the Revenue Mobilisation, Allocation and Fiscal Commission took the Federal Government to court over deduction from the excess crude account for the NIPPs. We are celebrating this today, but not without lots of challenges.
“At a time, the road was not able to carry the turbines. There was no properly planned gas infrastructure programme. There were land issues with the communities. The NIPPs we are commissioning will be privatised between now and first quarter of next year. The hope that one day we will have stable power supply is gradually becoming a reality.”
But the President was curiously silent on the probe that was mainly responsible for the delay, preferring rather to hint at it, while looking towards the successes recorded since then.
“NIPP at a point was comatose. What we are witnessing today is the culmination of the painstaking work that was put in the actualisation of the objectives of this power sector reform project,” he said. No particular mention was made by the successor administration that began the project in 2004 by the same ruling PDP.

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