Omoh Gabriel, Leon Usigbe and Victor Ahiuma-Young
31 March 2008
Lagos — The on-going power probe at the National Assembly has ruffled some feathers, and sent cold shivers down the spine of some political heavy weight. But tongues are wagging on the newfound courage of the Assembly.
In the first instance, it is not doing anything new but its traditional role which it has not played according to the rule in the last eight years.
Ordinarily in its oversight function, members of the House of Representatives should have demanded from the Executive arm of government each year, the financial profile of the country before approving any budget. It is their constitutional function to cause the Executive to account for the money spent on behalf of Nigerians. In the last eight years as the probe has now shown clearly, the National Assembly did not live up to expectation. The question on the lips of Nigerians is: What will come out of the on-going probe and how much was actually spent?
While the CBN said $4.8billion was spent, the Accountant-General of the Federation gave the figure as $3.7billion and Power Holding Company of Nigeria (PHCN) said it was $3.7billion that was spent.National Union of Electricity Employees has put the amount at $4.07billion.
In its memo to the probe panel, it said: "May we bring to the attention of Honourable members of House Committee on Power & Steel and the general public that the real figure that was spent by the sector was $4.07 billion not $10 billion as the President claimed. We are using this opportunity to call for a probe to be instituted in the sector to find out the difference between the $10 billion claimed by the President and the $4.07 billion actually acknowledged by PHCN.
"This is more appropriate especially at this period the country is really waging war against corruption, there is need for the relevant bodies to look for the difference and bring the perpetrators of any fraud to book no matter their current positions.
It is very clear to us from the report from the PHCN, that about $4.07 billion was spent, it's not a case of wild goose chase. The people to be asked (politicians) are still very much around if' the President is serious to find out and look for the difference of $6 billion.
Former President Olusegun Obasanjo who is currently the Chairman, PDP Board of Trustees, Liyel Imoke who is now the PDP Governor of Cross River State was at a stage the Technical Board Chairman of NEPA and Minister of Power, Olusegun Agagu who is now the PDP Governor of Ondo State was formerly Minister of Mines and Power.
"These are the people who should be called to come and explain how much was spent and why the system failed to work.
This is a clarion call for the President unless he wants to toe the line of his predecessor in the attempt to tackle the problem in the Power Sector. Declaring a state of emergency on the Power Sector won't solve the problem of power supply in the country.
"PHCN as a miniature Nigeria, has had and is still having its share of the menace called corruption. It is saddening to note that Contract Award System has been a source of worry. Most jobs contracted out are such that could be adequately, effectively and conveniently undertaken by in house engineers in PHCN.
These contracts which at times are unnecessary, are awarded to cronies and political agents who know next_to_nothing in engineering. These are aimed at settling some identified 'good boys' at the expense of the company and Nigerians at large.
"We plead that this Committee delve into this area to exhume certain irregularities in relation to our claims. Besides, the Power Purchase Agreements entered into and those that facilitated them need to be exposed." the union secretary general, Mr. Joe Ajaero wrote.
THE GENESIS
When the House of Representatives on January 31, 2008 mandated its Committee on Power and Steel to carry out a comprehensive investigation within four weeks into the huge sums of money that have been expended in the sector without commensurate result, it probably did not envisage the pandora box its action was going to throw up.
That singular act of the Lower house has opened a can of worms. The stench from the can is suffocating the country and almost all the arms of government involved are singing discordant tunes for the nation to dance to. The resolutions to probe the power spending followed a motion to that effect sponsored by the Minority Leader of the House, Hon. Mohammed Ali Ndume and 103 other members of the House.
The movers of the motion did not leave any doubt of their motive as they stressed the importance of power supply as key to the industrial, technological and social transformation of Nigeria, more so in the new drive for the country to be one of the 20 largest economies by 2020. They were worried that the level of power supply in the country was worsening, pointing out that instead of 4,500MW installed capacity, the nation was generating between 3000-3200MW only.
On February 6, the Speaker of the House of Representatives, Rt. Hon. Dimeji Bankole threw the first salvo when he told members that the past administration under former President Olusegun Obasanjo actually wasted about $16billion on the power sector as against the $10billion that was announced by President Umaru Musa Yar'Adua.
The Speaker's disclosure was contained in a statement signed by his Special Adviser on Communication, Mr. Kayode Odunaro stating that the over $6billion addition to the figure represented extra-budgetary spending on the sector under review.
This added a twist as to the proprietary and integrity of government figures and statements. In constituting the probe panel, he spoke of the need for the House to adopt an "input-output and outcome approach," that would ensure transparency, accountability and good governance saying, "only if we plan like this and monitor output periodically, would we be able to prevent a situation where $16 billion was spent on
power reforms with negative results."
Having briefed the committee, they swung into action and the chairman of the Power and Steel Committee, Hon. Ndudi Elumelu, set the tone form the form the investigation would take, calling for memorandum from government officials who served between 1999 and 2007, including former ministers of power, three of whom are now state governors - Liyel Imoke of Cross River State, Danjuma Goje of Gombe State, and Olusegun Agagu of Ondo State.
He also said former chairmen of the Senate and House committees on Power which include another serving state governor, Gabriel Suswam of Benue State, would be expected to present memoranda. Others are former ministers of finance, all Auditors-General of the Federation, Accountant-General of the Federation and Attorney-General of the Federation, all governors of Central Bank of Nigeria within the period, special assistants to the Minister of Power, the Inspector-General of Police, the Armed Forces, Secretary to the Government of the Federation, state governors and embassies of foreign countries, were included in the dragnet to uncover how the money was spent and how much is actually involved.
Similarly, the committee invited memoranda from local government chairmen, ministerial departments, civil society, labour, corporate organisations, Nigerians in Diaspora among others. Hon. Elumelu stated that the committee would also appreciate inputs from the intellectual class and research institutions assuring that it would not tolerate frivolous, diversionary, malicious or unsubstantiated statements or allegations designed to tarnish the image of anyone or settle subterranean political scores.
"Indeed, every claim or statement submitted to the committee shall be subjected to the most rigorous test of authenticity and reliability. "We count on this assignment as a sacred national task and we shall leave no stone unturned to resolve this mystery faithfully, expeditiously and judiciously.
"We shall be fair to all but thorough and uncompromising as to truth. Where necessary, we shall invite the Corporate Affairs Commission to give statue report on contractors to ascertain if they were duly registered and to know the directors of such companies," Hon. Elumelu declared. He made it clear that even when the House was determined to unravel the mystery behind the non-performance of the Power sector, it has not accused anyone of committing any crime so far but "we have to get to the bottom of this rot and prepare the way to cleanse the Augean stable.
The committee was inundated with several responses and on March 11, 2008, Governor Gabriel Suswam was at the probe panel to testify.
GOVERNOR GABRIEL SUSWAM DEMANDS FOR $3.2 BILLION REFUND TO STATES
Angered by the failure of the National Integrated Power Project (NIPP) to materialise, states and local
government councils in the country are now demanding for the refund of the $3.2billion they contributed for its implementation.
Making the demand through the panel, Governor Gabriel Suswam of Benue State said the amount was what the two tiers of government in the country contributed from the federation account to National Integrated Power Project. The Minister of State for Energy, Hajiya Fatima Laraba Ibrahim was also at the panel to give her testimony.
Also present at the probe on the 11th was the Governor of Taraba State, Danbaba Suntai who told the panel that a conflict between the contractor who had earlier been given the Mambilla Electricity project in Taraba State and the one who subsequently got the go ahead to implement the project, had stalled it.
According to Governor Suswam, the NIPP was established following the setting up of the "Excess Crude" account by the National Assembly which led to the agreement between the federal, state and local governments to contribute from their share to the building of power plants to service the oil-producing areas in the South-South region.
"All the states and local governments agreed and a certain amount of money was taken from the share of states and local governments and set aside for the NIPP project. There were two projects there, including the one the states and local governments contributed enormous amount of money towards. The NIPP, so to say, is not part of government funds that the National Assembly appropriates. That is why the states are now saying that they must return our money," Governor Suswam stated.
But he regretted that after billions of dollars had gone into the project, there was nothing much to justify such contributions from the states and local governments. "We contributed $3.2billion and up till now, there is no sign that as we were hoping, in 2007 we will have 10,000 megawatts of electricity." According to him, the project was a laudable initiative "but there is no reason why we are where we are, not if the funds were properly applied."
Governor Suswam who is the immediate past chairman of the House Committee on Power and Steel said a visit by his committee to four of the projects including Gereku, Alaoje, Papalanto and Omotosho showed that they were still struggling to get off the ground in spite of the huge investments on them.
He observed that adequate logistics were not taken into consideration in the planning of the projects, a situation which led to absence of the necessary gas pipelines to supply gas to the plants. He said that when government realised this, it hastily imported gas pipelines which have since been lying waste at the ports.
MARCH 13, 2008FORMER HEAD OF STATE NAMED IN FAILED NIPP CONTRACT
Opening the Power can of worms, a contractor named a former Head of State as the chairman of Energo Nigeria Limited which in 2003, got a N19billion transmission substation contract that has achieved less than 5 per cent implementation eventhough the company has been paid about N13billion of the contract sum.
The Managing Director of the company, Mr. Dejan Gerotic who disclosed this in his testimony at the public hearing, said the former Head of State became the chairman of the company in 2000. He also named as a member of the Board of Directors, former Managing Director of defunct National Electric Power Authority, NEPA, and a minister, Alhaji Hamza Ibrahim.
According to him, the company had been awarded a contract for construction of an EPC 2003 (Lot 3) 330kva substation and New Haven_Ubuoji_Ikot Ekpene transmission line which was made up of 72,686,136.24euros for the offshore component and N4, 856,923,918.88 for the onshore component.
Mr. Gerotic stated that the work scheduled to be completed in 2009, has achieved 30 per cent progress, but the Managing Director of the National Integrated Power Project, NIPP, Mr. James Olotu disputed this saying that as far as the NIPP which monitors the project was concerned, it has only reached less than 5 per cent completion in spite of the huge funds released to the contractors.
Similarly, Mr. Olotu disagreed on the total amount involved in the offshore component which Mr. Gerotic had given as 72, 686,136.24euros putting it at 73,686,136.24euros even though he admitted that Customs duties may have accounted for the difference of N1billion.
MARCH 14, 2008
GOVERNOR GABRIEL SUSWAM OF BENUE STATE AND BABATUNDE FASHOLA OF LAGOS TESTIFY
Governor of Lagos State, Babatunde Fashola, was at the public hearing where he demanded for a refund of N9 billion deducted from the revenue accruing to the state between 2005 and 2007 by the Federal Government for Integrated Power Projects (IPPs), through an indemnity.
According to Governor Fashola: "It was in early 2005 while the case the state instituted against the Federal Government on the Local Government funds deductions at the Supreme Court, was going on, that all of that started. They were deducting N225million every month, it has aggregated to N9billion.
On whether Lagos State would still go ahead with the establishment of another Integrated Power Project as done earlier, the governor stated: "We would be ready to go forward, and like I have said, the only way is to allow participation of the private sector. We should allow the private sector to take a critical position and drive it. Power generation is a commercially viable sector the world over."
Fashola who appeared before the panel at 5:06 pm and took the podium immediately, told the House that most of the projects undertaken by power contractors were either abandoned half way or not done at all. He disclosed that Lagos State industries were at present running three barges, which were generating over 270 megawatts, but said the state was targeting 10,000 megawatts within the last few years. Fashola advised the Federal Government to vest all power projects in the hands of the private sector.
There was another twist to the issue when the committee heard that the Nigeria Integrated Power Project (NIPP) over which the administration committed about $3.54billion was illegal. The revelation came from its Managing Director, Mr. James Olotu who admitted that the organisation which was tied to Excess Crude Account was a mere contraption agreed on by the federal, states and local governments in their desire to solve the problem of power in the country.
According to him, "NIPP does not have jurisdictional powers. It cannot be sued or sue.
In essence, it is an illegal organisation. What happened was that the federal, state and local governments came together to find ways of solving the power problem. "Originally, there was to be a Board, that is to say that each of the tiers of government will be represented, but the modalities could not be worked out so that could not materialise. Mr. Chairman, that is the situation," he declared.
He also revealed that the NIPP was supposed to have a Board comprising representatives of the stakeholders but the idea collapsed when they could not agree on the modalities. Mr. Olotu stated that NIPP organogram was absurd as his subordinate, one Engr. C. O. Nwachukwu actually in charge of job certification, reported directly to the Minister of Energy without routing such through him as the chief executive.
He said he was unaware of details of many of the contracts awarded by NIPP and, therefore, requested the committee to wait for the arrival of Engr. Nwachukwu from a course in England. Mr. Olutu, however, described how some of the contracts under the project were awarded by the former president citing the example of Rockson Engineering Firm saying when he commissioned one of the projects in Rivers State, he decided on his own to award four more of such projects worth N88 billion to the same contractor.
They included Gbariam Ubio Gas Plant valued at N18.25billion in Bayesla State, Omoku Power project in Rivers State worth N20.9billion, Lot 2 Egbema Power project N16.8billion, Alaoji Power Generation project worth N16.6billion as well as Alaoji-Owerri, Alaoji-Onitsha and Alaoji-Egbema 133KVA 75 kilometre transmission project worth N15.5billion.
On the Gbariam-Ubio project, the contractor collected N17.6 billion out of a total contract sum of N18.25 billion, while it was also paid the sum of N12.6 billion out of a total contract sum of N20.9 billion on the Omoku project.
Rockson, he said, was paid N15.8 billion out of a contract sum of N16.8 billion for the Egbema project, while N12.4 billion and N11.4 billion respectively out of N16.64 billion and N15.5 billion were paid for each of the Alaoji projects. Mr. Olotu said that in spite of the huge funds collected by the contractor, the jobs were only about 5 to 11 per cent completed whereas the chairman of the company, Sen. Anietie Okon argued that the work had reached 50 per cent levels. Sen. Okon added: "Throughout all our projects, there have been a lot of frustrations. We have to source for funds on our own to do the jobs just to show that local companies have competent hands also. We have opened a pathway for Nigerian companies because we have confidence in the system.
MARCH 17, 2008
GOVERNORS LIYEL IMOKE, OLUSEGUN AGAGU, SOLUDO TESTIFY
On March 17, two former ministers of power and the current CBN Governor testified at the public hearing. In their testimony, they said that contrary to widespread belief that about $16billion was wasted on the Power sector between 1999 and 2007, the investment did not go to waste.
Testifying, Liyel Imoke and Agagu both former ministers and now governors, also agreed that so much more was needed to be done in the Power sector by the Federal Government to tackle the perennial electricity problem in the country. Also, the Governor of the Central Bank of Nigeria, Professor Chukwuma Soludo gave a summary of the disbursement to the Power sector which passed through the apex bank to include; N422.2 billion domestic component and $4.2billion of foreign components. Clarifying his role both as head of the Presidential Technical Committee on Power and later as the Minister of Power and Steel, Sen. Imoke noted:
"I will like to bring to light some facts. Power supply is increasingly (becoming) capital-intensive. Another fact which I will like to state is that until there is total completion of the power projects, it adds nothing to the grid. It will only deliver electricity when it is complete and connected. "It takes time to build minimum capacity. Thermal takes ten years. In the last few days, the national consciousness has gone to feverish pitch on the amount spent."
The Accountant-General of the Federation testifying, gave some clarification on the amount spent According to him, another source of income is the internally generated revenue. PCHN has not received subvention over the years. Internally generated revenue is used to meet its operations. It has over 30, 000 staff. "These clarifications," he said, "will help the (House) committee in understanding the nature of expenditure in the Power sector. A substantial amount of PCHN fund was used for NIPP continuing his testimony, Imoke said. Our power plants are being adopted in other countries. Saudi Arabia and Libya adopted NIPP.
"South Africa is making huge investment over five years.
It is not peculiar to Nigeria. NIPP was the largest on-going integrated power project in the world. The challenge of the power sector is for us to resolve. Only strategic focus and articulated plan can achieve this." He further said: "I was drafted into the technical board in 2000. The country had been in darkness for six days. There was a total collapse of the national grid in March 2000. That was the lowest ebb in our power situation.
That was when the then president, set up the technical committee. "On my appointment, I left to wind down the activities of OMPADEC and then moved on to the Technical committee. The president asked us to repair dilapidated machines. There were 79 generating units in NEPA and only 19 were working. By the time we left in December, 44 units were working."
Testifying, he stated: "Before 2000, the last power station that was built was in 1987, Shiroro with 600megawatts. In those 20 years, the Nigerian economy had grown but we did not realise the importance of power in growing the economy. There are publications that say capacity in Nigeria is 6000megawatts when you take into consideration the power stations built in 1961. The highest generation was 2,600 megawatts in July 2001. It was a record.
A lot of what we call available capacity generation is obsolete. Our power stations are all old. No new power station, Egbin, the flagship, was completed about 20 years ago. Kainji is over 40 years old, and Jebba is about 30 years old. They are all stations that are supposed to be delivering power everyday. Since the completion of Shiroro, no new power station has been built. NEPA never overhauled its system.
The system never got the maintenance that was due to it until the deliberate intervention with the NIPP. We were faced with a daunting challenge which is even greater if we were to work towards the 2020 target. Our target was to increase to 4,000 megawatts. Afam 1,2,3,4 had zero capacity when we resumed at the Technical board. By the time we left, we had put in Afam 5 and also rehabilitated some of the aged units. We brought it up to 400megawatts.
"I need to say this to clear the issue of money wasted.
Beyond that, we had Delta 2 and Delta 3. They were old turbines installed in the 60s. Delta 1,2,3,4 were constructed between 1958 and 1960. We rehabilitated 2 and 3 and delivered 300 megawatts."
Giving further insight into the dearth of power in the country, he said, "Kainji which had suffered lack of repair - we had a runaway unit because of age and lack of maintenance. The turbine went on its own and the entire station went under water. We had to rehabilitate unit 11.
The unit that ran away is still not working. "There was a transmission line constructed to Abuja that could not carry electricity in 2001. It was constructed in the early 80s. There was a plan to construct a higher line but it did not take place. We brought in emergency diesel generators.
The Abuja Shiroro 330kv was brought in and it relieved the problem of Abuja. But if there is no new one, there will be problems in Abuja. We may soon bring back diesel generators to Abuja."
Continuing he stated: "Yenegoa was connected to the national grid during our time. We were faced with a number of challenges including some contracts we met which we had to renegotiate. One was 150 million euros and we brought it down to 110 million euros. Owerri too.
Before the official advent of Due Process, we introduced procurement of equipment from original products manufacturer branded from the factory with NEPA marked on them to reduce vandalisation. On the cost comparison on the procurement by NEPA and the Technical board, there was considerable savings. There were a number of improvement and efficiency. The cash collection was N1billion a month at that time. I believe by the time I left there, it was N6billion. The funds were ploughed not just into NIPP but salary of staff, gas purchase, etc. Considering the efficiency of that time, the investment did not go to waste."
According to him: "In that intervening period, generating capacity grew consistently during the period from 1,600 megawatts to 3,600 megawatts of electricity. I don't think that record has been met since. There is no quick fix to the rehabilitation. Short of expansion of the grid and new capacity, we are going to be faced with challenges. Some suggested private sector involvement.
It will take tremendous political will to achieve this. Tariffs have to be increased. The panel heard that between 2002 and 2006, Geregu, Papalanto and Omotosho plants were embarked upon.
Imoke said he believed the plants have been completed.
Addressing the specific question on the National Integrated Power Project, NIPP, Sen. Imoke also stated that: "Faced with those challenges, without adding new capacity, nothing would be achieved. We knew there was the need for new capacity. There were two schools of thought for private participation and government involvement. NIPP was conceptualised in 2004 when it was observed that a power plant had been constructed near gas source but it could not make use of the gas because all the gas is being committed by the powerful oil companies to their future contracts. So, there is no gas for us to meet our domestic needs.
They make more money selling it abroad. Even if you put the plant on top of gas, you will find out that there is still no gas. Where the power stations are located has no bearing to where they serve. We have one national grid but unfortunately for us, it is not complete. The other challenge for the Power sector is completing the national grid. The objective of the NIPP was to create a robust national grid."
According to Imoke: "There are misconceptions about how NIPP came into being. Former President (Olusegun Obasanjo) convened a National Economic Council meeting presided over by himself instead of the Vice-President and he expressed the need to generate new capacity. He got the endorsement of the governors to set it (NIPP) up and fund it from the proceeds of the Excess Crude since it was not in the budget
. The president sought the agreement of ALGON. The structure was presented as a project which belonged to all tiers of government and as such, a company had to be set up which had all tiers of government represented. The Niger Power Holding Company was set up. The NIPP is a project. It is not a company and it cannot have a Managing Director. The NIPP has a project management team. Everybody in NIPP is a staff of NEPA. Okonkwo who was the Head of Distribution in NEPA is the Head of Distribution in NIPP. The concept was simple. How do you locate a project that belongs to all in a ministry?"
According to him: "The committee to implement the project was headed by the Vice-President and had governors of the states where they are located and representatives of the local governments. We all belonged to this committee that was supposed to superintend over it.
There was no money budgeted for NIPP. We held over 50 meetings during my time. Towards the end of the administration, there were differences between the President and the Vice-President and meetings were not holding regularly and all projects were taken to the Federal Executive Council for approval. There are documents to prove that all projects went to the Federal Executive Council. We engaged several international consultancy firms and the best hands in NEPA.
"There was also the challenge of the nature of procurement. Turnkey contracting was considered to be more expensive than EEP contracting. We standardised equipment supply. General Electric submitted the lowest bid when we advertised and all 18 turbines that were contracted to General Electric have since been delivered and are at the ports.
We realised that we needed to complete Mambilla in five years for N4billion that would have been cheaper than NIPP. All procurement for NIPP was through international bidding process. There was no time procurement were given out. They were submitted to Due Process office for certification. They had performance bond and guarantees to make sure contractors don't abscond.
"Letters of credit were opened by us and could only be drawn on based on milestone. It would be unbelievable to say that contractors who haven't been to site have drawn them 100 per cent. If so, there are questions that must be asked. I believe the committee will clear the air.
"Nigerians need NIPP. We don't need to politicise or criticise it. (There is) no reason why a project with letter of credit should not be delivered. No excuse for non-performance," Sen. Imoke averred. He then recommended that "it is imperative that the committee looks at what we are doing about reforms in the Power sector. It is important that the committee looks at the current structure of the utility and advise on it. There is also the 25-year rolling plan which if followed, will address the problem.
"We need to close the transmission loop.
We need to look at manpower and private sector participation. South Africa is spending $21b between now and 2012 to improve their power.
"We put in everything we had with the best of intention for this country without focusing on the lining of our pockets." He confirmed that the over N13 billion tracked down by the committee so far was a correct figure as it was confirmed by the Office of the Accountant-General of the Federation. When requested by the Minority Leader of the House, Hon. Mohammed Ali Ndume to assess the Power sector, he said:
"The assessment is what I have to do with mixed feelings because we don't have electricity. Not enough has been done to address the challenges of power supply in this country. Beyond the execution of the NIPP, the completion of Mambilla, reforms are necessary." In response to another question of mobilising contractors for up to 80 per cent when nothing had been done by the contractors, he remarked that "during my tenure in office, no contractor was mobilised beyond the advance payment approved by the Federal Executive Council and without guarantees that the contractor could be called upon at any time. "After Due Process and the Federal Executive Council approval, the project was considered approved.
There was no money for NIPP per se. After that, letters of credit were opened and the documents are processed in the office of the NIPP. At that time, you could not get an advance payment without an advance payment guarantee and a performance bond. In November 2006 when I left, it has not reached the stage where contractors could be drawing large amounts of money. Milestone payments are not approved by the minister.
That is why I say the committee should get to the bottom of this. The whole essence of the project was to ensure that nobody got more money than they should get. If they have, why have we not called on the guarantee or the performance bond?" he asked. He also revealed that all NIPP projects have an advance payment of 25% backed by first class bank guarantees adding: "That was the approval by FEC. Anyone beyond that should be investigated."
He further explained why it may seem that nothing has been done on a project for which so much money has been paid saying: "The nature of Engineering Procurement and Construction (EPC) contract so that we don't raise alarm, is that one hundred per cent of our contracts are offshore. Construction is done locally. If it is an EPC, you need to look at the contract in order to confirm the procurement component. If the contractor has procured the equipment, they are given considerable marks for execution. Procurement takes place before construction to ensure proper foundation. We will get zero value under NIPP unless all the projects under NIPP are completed."
On the the Mambilla Electricity project, he said it was first thought of about 40 years ago saying, "I was shocked when I resumed (and discovered) that there was an outdated feasibility but nothing on ground. We redesigned it. There were two bidders including La Mayer which was the leading consultant at that time. "Build, Operate and Transfer, BOT, was an excuse for Mambilla not to happen.
It is not a project that is profit-making but it is a project that we need as a nation. The Mambilla project is a project that can be funded by all tiers of government from the Excess Crude. It should be a presidential initiative; a project of $4 billion. It cannot be taken care of in the budget and some people brought in some Chinese to build it and they asked for N6 billion.That was insincere," he declared.
Sen. Imoke gave the amount that was released to the Power sector through the Presidential Technical
Committee between 1999 and 2003 as follows:
1999 - N2.3billion
2000 - N20.6billion
2001 - N49.7billion
2003 - N5.2billion
On his part, Chief Agagu remarked that even though he could not give specifics, all the transactions in his time followed due process. He told the committee: "I will want to crave your indulgence to say I cannot provide specific details. The transactions carried out during my time followed due process in accordance to extant rules.
They are available for scrutiny. There were cost-saving measures for instance in Papalanto signed in my time. We created hope for the Power sector. I met 1,400 megawatts. Transmission and distribution were near collapse. Through the support I received
from the former president and the Technical board and NEPA, we were able to increase power from 1,425 to 4,000megawatts and we improved transmission and distribution. In my time, there was no load shedding by NEPA, the records are there.
"We built a new Afam Station, consummated Omotosho, Gereku and Papalanto.
They were built to add more than 1,500megawatts. Although their executions were delayed, they are now functional. Many more electricity projects were built and many on going. We developed a draft power reform bill approved by the Federal Executive Council and submitted to the National Assembly to attract the much needed private investment. All these achievements were made within a budgetary provision of less than N1.2 billion budgeted by the National Assembly. 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. Privatisation should be looked into," he said.
While responding to questions, Chief Agagu noted that "in terms of actual power generated, we got to 4000megawatts. In terms of actual power injected into the system, we got to 3,600 megawatts 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 (had) pursued things the way we ought to. This is 2008, yet they have not been completed. The 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 $150million. We have no reason not to complete the gas pipeline that would take may be $2million. If we do the right thing, we will have 1000megawatts of new electricity," he said. On the demand by Lagos State Government for a refund of N9billion to it, Chief Agagu observed that: "What was being charged Lagos was what was signed between the Federal Government and Lagos State. It is not right to say don't take our money.
They can argue to be treated differentially or renegotiate." He also spoke on the alleged award of contracts to unregistered companies saying that it was not the fault of the ministers if indeed a thing like that happened.
"It is possible. There is a Ministerial Tender's Board. The minister is not a member. If the contract was lower than N20million, it would be minuted to me. I don't think any minister would be dutiful enough to check registration. Let's look at those who passed those companies. To throw the blame at people at the head at political level, will not help us. The bureaucracy should be examined," he said.
The CBN governor in his submission explained the role of the banker as being a mere banker to the Federal Government saying: "CBN is a banker to government. Our duty is not different from your relationship with your bank. If you write a cheque, we verify, when the mandate is correct, we provide the service. The distinction here is that we need the purpose so that we can send it to the minister to reconfirm and once it is reconfirmed, we pay." He refused to be drawn into whether or not it was right to award contracts to companies not registered with the Corporate Affairs Commission. On Excess Crude account, he observed that:
"There is still some contestation on the fund which belongs the three tiers of government. If you ask me if such spending has to be undertaken, I will say the NIPP is a good candidate for it because the bulk of it is externalized and it would not have negative bearing on the economy. It will be good for projects that are externalized instead of the one that would pump money into the economy."
The Bureau for Public Procurement, otherwise known as Due Process, revealed that it certified projects worth N195.6billion or $239million for the National Integrated Power Project, NIPP.
DUE PROCESS CERITIFIED N195 BILLION NIPP CONTRACTS
The Bureau for Public Procurement otherwise known as Due Process, revealed that it certified projects worth N195.6 billion or $239 million for the National Integrated Power Project, NIPP.
The Acting Director of the Bureau, Engr. Emeka Eze who stated this while testifying before the committee, also remarked that NIPP contractors who may have been paid about N3.3 billion in over-inflated contracts, may be made to refund it. According to him, the amounts involved in the certified projects were for projects above N50million which were presented before the Federal Executive Council for approval. He, however, noted that Due Process Office did not approve the payment for the projects because NIPP was a Federal Government intervention programme which was not overseen by the Bureau.
According to him:
"These figures are for projects above N50 million that go to the Federal Executive Council. The N195.6 billion, when converted, amounts to 24 million euros or $239 million. NIPP doesn't come to us for payment because it is a presidential intervention. "All the contracts for NIPP were certified for award but because they are presidential intervention, they didn't have to come to us for payment.
OBASANJO WITHDREW $5.2 BILLION ILLEGALLY FROM FEDERATION ACCOUNT - RMAFAC
The Chairman, Revenue Mobilisation Allocation and Fiscal Commission, Dr. Hamman Tukur told the House of Representatives Committee probing an alleged expenditure of over $16 billion on the dwindling Power sector, that the administration of President Olusegun Obasanjo made illegal withdrawals from the Federation and the Excess Crude accounts to the tune of $3.067billion, apart from annual budgets approved by the National Assembly for a period of eight years for
that sector. Dr. Mrs. Obiageli Ezekwesili on the other hand, wrote the House of Representatives through her legal counsels declaring "She is no longer in the service of the Federal Republic of Nigeria" and would seek the approval of her new employer, the World Bank, to appear before the Committee for questioning on her past role in the Power sector.
Dr. Tukur who was summoned by the House Committee on Power to testify on the role of his Commission in the power projects, declared that "Our role here is to let you know about our feelings on the several illegalities committed against the federation.
These Power projects seem to be classified under three distinct names. When we started raising alarm in the commission, it was called Niger-Delta Power Holding Company and the first payment was $666,000. When we drew the attention of all the governors, including the National Assembly, they now changed the name to NNPC Joint Venture Operation Gas for NNDC plants. Again, the sum of $213 million was withdrawn directly from the Federation Account.
"Under whose authority, we are yet to know, on the 28th of December 2005. We again drew the attention of those concerned; all the beneficiaries of the Federation Account including the governors, the Minister of Finance, all the local governments. We said this should not have been withdrawn from the Federation Account. Then the name changed again. It now became National Integrated Power Plants.
"Between 2005 and 2006, $3.974, 394, 143 was withdrawn for power projects, and we were surprised that commissions were paid to the Central Bank even after the projects were stopped. To whoever the commissions were paid, we do not know. On 17th of May, 2007, $2 million was paid as commission charged (by the Central Bank) on Letters of credit. When we actually started raising alarm in the Commission, was on the NIPP commissions (deducted by the Central Bank). We raised alarm on the beneficiaries. Then again, $213million was withdrawn from Excess Crude account on the 28th of December 2005, by NDDC. When we raised alarm, the name changed to NNPC/JVC cash calls," he said.
Dr. Tukur disclosed to the panel that in 2006, before the administration of President Olusegun Obasanjo packed up, the then Minister of Finance, and now a regional World Bank Managing Director, Dr. Mrs. Ngozi Okonjo-Iweala, made withdrawals from the Federation Account in the name of loans to finance NIPPs.
"Okonjo-Iweala wrote the former National Assembly and stated that the money taken from the Federation Account are loans for the funding of projects. We (RMAFC) have the record of daily deductions: On the 6th of March, withdrawals from the Federation Account were made for the funding of NIPP projects with the sum of $ 209million, $2.8 million was again paid on the 28th of February 2006, then another one on the 29th of March 2006 and it amounted to $244 million
"These NIPP projects kept on going and going. We wrote to the Federal Government that if these projects are not approved, could you stop the commissions? The President directed that they be stopped, but they kept on paying commissions. Commissions to who? Some of the money came from the Excess Crude account, some from royalties. The Federation Account was being charged. We went to sites, nothing was there, so who was this commission paid to?
OBASANJO AND ATIKU HAVE CASE TO ANSWER
The Committee concluded its public hearing last Thursday with a warning that former President Olusegun Obasanjo and his vice, Atiku Abubakar had case to answer. Elumelu said since Atiku served as Chairman, National Economic Council before his relationship with his principal turned sour, evidence abound that he played roles in award of majority of the contracts under probe. According to him, if it became necessary, "even if it means doing it in camera, we would do it."
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