16 October 2008

Nigeria: 2009 Budget - FG Convenes Special FEC Meeting Friday

President Umaru Yar'Adua has adjourned the weekly Federal Executive Council (FEC) meeting to Friday to allow the Cabinet deliberate more on the 2009 Appropriation Bill due for presentation to the National Assembly.

The government on Wednesday thumped its chest as it announced an impressive boost in electricity generation to 3,700 megawatts from the less than 2,000 megawatts inherited from the previous administration last year.

This feat achieved in less than two years was in spite of enormous challenges faced by the Power Holding Company of Nigeria (PHCN), which has now been given the green light to procure needed equipment directly from manufacturers.

Power generation is on the President's Seven-point Agenda, and he had reiterated his resolve to declare an emergency as soon as he gets legal and legislative backing from state governments, 98 per cent of which announced their endorsements last week.

According to the Minister of State for Energy (Power), Fatima Balarabe Ibrahim, who briefed newsmen on the outcome of the Federal Executive Council (FEC) meeting, which Yar'Adua chaired, the mandate to PHCN to bypass contractors is meant to sustain the rise in power generation. Government is targeting 6,000 megawatts by next year and 10,000 megawatts by 2011.

She explained that the move would evolve a direct procurement plan to decentralise critical procurements to power plant level, particularly to meet the needs for power transformer and indoor switchgears to improve power supply.

In this regard, the Bureau of Public Procurement (BPP) was requested to review and change the source of funding of the two contracts from PHCN's internally generated revenue to the 2008 Appropriation where funds have been provided.

Minister of Information, John Odey, who spoke more on the contracts, disclosed that N4.6 billion has been appropriated in the 2008 Budget for transformers and switchgears.

The FEC further approved a price review and project augmentation cost of contract for the design, manufacture and supply of two 30/40 132/33KV Mobile Substations for overloaded Ogba and Akute substations at a revised sum of $4.95 million plus additional N10 million for clearing and local transport. The project originally cost $2.94 million.

The Minister explained that the Ogba transformers being overloaded require the station to be shut down and completely de-energised to create room for installation work, while the Akute Substation will cater for power supply in areas that will be affected during the rehabilitation work, thus the need for mobile substations.

"In view of the fact that the Ogba transmission substation is the heart of Ikeja Industrial Area of Lagos, one of the leading revenue generating areas for PHCN, and since there is a provision of N5 billion in the 2008 Appropriation for execution of the project under procurement of power transformers, reactors of regeneration services, council gave the approval at the prevailing exchange rate of the time of payment with a completion period of 18 months," Odey said.

He listed other contracts to include the supply of 350 40-KG cylinders of SF6 Gas for System Circuit Breakers at 216,750 euros plus N18.97 million as onshore portion inclusive of VAT, Customs duties and other surcharges.

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