• Naija Square Forum | Community | Discussion Forum | Join Us Today!

$16b Power Projects By Obasanjo: Fact-Sheet $16B Appropriated, $13.5b Released

Discussion in 'Business & Economy' started by Davinci4ever, May 23, 2018.

  1. Davinci4ever

    Davinci4ever Well-known Member

    $16b NIPP funds: The fact-sheet
    Posted By: Yusuf Alli On: May 23, 2018

    FacebookTwitterGoogle+PinterestLinkedInWhatsApp
    Why was a whopping $15 billion invested in the National Integrated Power Project (NIPP)? This is a question that has lingered for more than a decade. Managing Editor Yusuf Alli writes on while the multi-billion power sector investment did not yield the desired result.

    LIKE a recurring decimal, the debate on what happened to the $16 billion power project vote yesterday returned to the front burner of public discourse.

    President Muhammadu Buhari said Nigerians deserve to know why there was no corresponding power supply in the homes and business premises after the administration of former President Olusegun Obasanjo for disbursed whopping $16 billion cash on power projects.

    He threw the jibe when the Nigerian Customs Service Comptroller-General, Col. Hameed Ali Presidential (rtd) led members of the Buhari Support Organisation (BSO) to the State House in Abuja yesterday.

    The power project budget has been a subject of controversy since expiration of President Olusegun Obasanjo’s tenure on May 29, 2007.

    In 2008, the House of Representatives described the $16 billion spent on power projects between 1999 and 2007 as “a colossal waste.”

    Also in 2016, a Non-Governmental Organisation (NGO) the Socio-Economic Rights and Accountability Project (SERAP) called for a probe into the disbursements.

    The group specifically asked the Chief Justice of Nigeria (CJN) “to appoint an independent counsel to investigate allegations of corruption in the spending of $16 billion on electricity by the government of former President Olusegun Obasanjo between 1999 and 2007”.

    SERAP said its request was brought “pursuant to Section 52 of the Independent Corrupt Practices and Other Related Offences Act 2000, and the letter and spirit of the Act, and the object and purpose of the 1999 Constitution (as amended).”

    Speaking at the Sixth Annual Trust Dialogue, organised by Media Trust Limited, former House of Representatives Speaker Dimeji Bankole, shed more light on the issue.

    He told the audience: “As for the power probe, $16 billion was truly appropriated but $13.5 billion was released. For your information, we are going to consider that report. We will take a whole week and we will do our recommendations live on television.

    “We are not interested in the personality involved, we are dealing with institutions. Our recommendations will be on how to strengthen those institutions such that we will never have a repeat of this kind of thing again.”

    The ad-Hoc Committee on Power Probe in the Green Chamber gave insights into why the nation was in darkness despite the huge cash withdrawal from the Excess Crude Account (ECA).

    The 2009 Report of the then Ndudi Elumelu panel was submitted to Bankole.

    It said that $13.278 billion was spent on power projects between 1999 and 2007.

    The committee recommended the termination of 13 contracts and the review of 10 others.

    According to the report, about 15 contracting and consulting companies were to be investigated by the appropriate agencies.

    These highlights were contained in the report of the committee on Power Generation Transmission and Distribution between June 1999 and May 2007.

    The Elumelu Committee was put in place by the House on January 31, 2008.

    The report, which was exclusively obtained by The Nation, also indicated that the Central Bank of Nigeria (CBN) and the Office of the Accountant-General of the Federation OAGF could not account for the whereabouts of $1 billion.

    The committee sought investigation of 18 people involved in power projects between 1999 and 2007 by anti-graft agencies Economic and Financial Crimes Commission (EFCC) and Independent Corrupt Practices and other Related Offences Commission (ICPC).

    Among those recommended for probe in the National Integrated Power Project (NIPP) report was Chief Obasanjo, under whose watch the cash was withdrawn and spent

    Others are: former governors Liyel Imoke (Cross River) and the late Olusegun Agagu (Ondo), who were Power Ministers; former Minister of State for Energy Abdulhamid Ahmed; a former Managing Director of the Power Holding Company of Nigeria (PHCN) Joseph Makoju; the ex-Chief Executive Officer of Transmission Company of Nigeria (TCN) G.O.P Osakue; TCN Transmission Head C.E. Ifesie; Acting General Manager (Lines) Mike Ezeudenna; Technical Committee Chairman/General Project Manager C. N.O. Nwachukwu; Technical Committee Deputy Chairman I. Onuoha and Niger Delta Power Holding Company NDPHC/NIPP Managing Director J. A. Olotu, among others

    The report said in part: “From the oral and documentary evidence, it was clearly established that the total expenditure in the power sector during the period 1999-2007 was $13, 278,937,409.94 billion.

    “Indeed, had the supplementary budget of the power sector in 2007 been implemented, the expenditure could then have been over $16 billion reported by the Honourable Speaker of the House of Representatives.

    “There are also unfunded commitments to the tune of $7.265 billion for NIPP projects as at May 29, 2007.

    “There is another $1 billion for PHCN capital projects awarded between 2000 and 2007, which have been captured in the 2008 Appropriation Act.

    “Additionally, the total commitment of the NNPC and its Joint Venture partners (of which the Federal Government, through the NNPC has an average of 51 per cent interest) towards the Independent Power Plants (IPP), gas sources development, gas transmission and metering of JV IPPs, PHCN power plants and NIPP power plants, according to the submission of the acting GMD of the NNPC is $7 billion, out of which about $1.62 billion has been expensed, leaving outstanding commitments of over $5.5 billion out of which the Federal Government will provide about $3 billion.

    “Recognition of these unfunded commitments would bring the total (funded and unfunded) FGN expenditure commitments in the power sector to over $24.5 billion between 1999 and 2007.

    “From the assessment done during the committee’s tour of the project sites, it is safe to conclude that no meaningful progress was made in the execution of power contracts.

    “It is curious and quite strange that officials rush to pay contractors in full even before engineering design for the projects have been completed and approved.

    “NIPP contracts were not only overpriced in comparison with PHCN contracts, they are also wide off the mark when viewed against comparable power stations in several parts of the world.

    “A comparable review of the cost of power installations in varied regions of the world such as South Korea, Saudi Arabia, U.S.A, Taiwan, Hong Kong, Mexico and Chile showed that $10billion could have built plants to produce between 5,000 to 6,000 MW of electricity. But this amount failed to do so in Nigeria.

    “Unfortunately, all NIPP payments were made without following due process. In its place, a process called ‘Waiver of Due Process Certification for Payment’ was adopted in flagrant disregard of Due Process Policy, thus paving the way for dubious and highly risky payments to contractors and consultants by the Federal Government.

    “The committee found hard and widespread evidence of systematic over scoping of projects in order to inflate costs both in PHCN and NIPP.

    “At least 15 transmission lines and substation projects have been identified. For example, the New Haven-Ikot-Ekpene 2x330kv Double Circuit Line was over-scoped by 49 per cent whilst the Afam-Ikot Ekpene 330kv line was over-scoped by more than 100 per cent.

    “The estimated aggregate cost inflation identified so far for transmission projects is over N20 billion and this is recoverable from contractors.

    “A clear example of project cost inflation is the proposed supply of 9No GE frame 9 gas turbines and auxiliaries at the cost of N185billion ($1.55 billion) awarded to Rockson International.

    “In comparison, it is noteworthy that GE supplied 18No turbines of similar specification previously at about $404 million, including cost of Technical Assistance (TA) services and Long-Term Service agreements (LTSA). The implicit cost inflation on the 9No additional turbines and associated services exceeds $1.145 billion.

    “Another example is the costing of the so-called change-order provisions for Alaoji Power Plant (Phase I) at a highly-questionable amount of $123 million.

    “NIPP Distribution EPC contracts were awarded at costs averaging about 10 times the norm when compared to PHCN contracts costs for similar projects in the past five years. This 1,000 per cent cost inflation of the NIPP Distribution EPC work scopes translates to an aggregate overpricing of over N50 billion.”

    On the funding of NIPP projects, the panel said: “The contracts were not funded from any Appropriation Act. What this means is that the National Assembly had no knowledge of the source of the funds of the NIPP projects.

    “All the government functionaries who testified referred to what they termed Excess Crude Account as the source of funding.

    On the role of the CBN, the panel’s report adds: “The committee is perturbed by the failure of the CBN governor to provide information in respect of Letters of Credit opened and where the money involving over $1 billion has been kept all these years

    “It is necessary to note that the CBN refused to provide the committee with schedule of utilisation and draw-downs on Letters of Credit as well as interest accrued on unutilised balances.

    “The committee strongly believes that these monies might be on fixed deposit accounts with some banks.

    “In view of the apparent unwillingness of the CBN to cooperate with the committee in this matter, or provide the committee with a proper account of withdrawals from Excess Crude Account, the balance on the account, where the monies in respect of the unutilised Letters of Credit are kept and interest that have accrued thereto, we recommend that the EFCC be invited to investigate the Office of the Accountant-General of the Federation and the Central Bank of Nigeria in respect of the above issues relating to Letters of Credit opened.”

    Besides recommending the termination of 13 contracts and the review of 10 projects, the panel recommended 15 contracting and consulting companies for investigation by appropriate agencies.

    The projects for review are: Owerri-Ahoada-Yenagoa Trx Line; Alaoji-Calabar 330kv Dc Trx Line; Maiduguri 330/132kv S/S; Alaoji-Umuahia 132kv DC Trx Line; Gombe Damaturu-Maiduguri 330kv Trx Line; Calabar 330/132/33kv S/S; Arochukwu 132/33kv S/S; Ado-Ekiti 132/33Kv S/S; Umuahia 132/33kv S/S and Damturu 330/132/33kv S/S.

    Those for cancellation are 2nd Benin-Onitsha 330Kv Trx Line; Gombe-Yola-Jalingo 330kv Trx Line; Katampe-National Stadium 132kv DC Trx Line; Umuahia- Mbalano 132 kv Trx Line; Mbalano-Okigwe 132kv Trx Line; Yola 330/132/33kv S/S; Umuahia-Ohafia 132 Trx Line; Ohafia-Arochukwu 132 kv Trx Line; Mbalano 132/33kv S/S; Okigwe 132/33kv S/S; Ohafia 132/33kv S/S; Akure-Ado-Ekiti 132kv SC Trx Line; and Onitsha 330/132/33kv S/S.

    The report added: “Having reviewed the figures provided by the Ministry of Energy (Power), the NDPHC, the PHCN, the Office of the Accountant-General of the Federation , the CBN, the Revenue Mobilisation, Fiscal and Allocation Commission (RMFAC), the Office of the Auditor-General of the Federation, the Nigerian National Petroleum Corporation (NNPC), Shell Petroleum Development Company (SPDC), Federal Ministry of Finance and the Budget Office of the Federation, the Committee came to the following findings of fact:

    “From all available evidence, the strategic plan for transforming the electric power sector envisaged in the Electric Power Sector Reform Act 2005 has not been faithfully prosecuted or diligently implemented.

    “The investigation revealed widespread and flagrant abuse of legal process, resulting in avoidable waste, continued power failure and inestimable human suffering on the part of Nigerian masses.”

    The report further highlighted specific lapses by the indicted institutions in charge of power reform.

    Concerning the Ministry of Energy (Power), the committee said the Ministry, which ought to work with the NCP to “expeditiously complete the process of unbundling the defunct National Electric Power Authority as spelt out by the Act, did not live up to expectations.

    “In this regard, the ministry failed in its duty to ensure that parastatals under its jurisdiction existed and carried out their functions in accordance with laws of the land.

    “The committee strongly believes that no official or institution of government has a right to override the law or operate as if the law did not exist.

    “There is no need for parliament to make laws at all as if the laws are to be flagrantly ignored and abused by institutions and officers of government. Without rules, the country has not even started on the road to progress.

    “It was found that either by acts of omission or commission, the Federal Ministry of Energy (Power) turned a blind eye to the illegality of PHCN continuing to oversee the power sector long after the expiry of the period allowed for its existence under the law.”

    On the NCP, the committee said from the evidence adduced by relevant sector operators during the hearings, “it is apparent that the NCP since 2006 abdicated its responsibilities in respect of the management of the reforms in the power sector.

    “Section 3, sub-section 1 of the Electric Power Sector Reform Act 2005 authorised the NCP to fix an initial transfer date of the assets and liabilities of PHCN to the successor companies contemplated by and prescribed by the Act.

    “The NCP via an official Gazette fixed the transfer date to be July 1, 2005. The same Act authorised and mandated NCP in Section 10(1) to not later than one year from the initial transfer date to transfer the assets and liabilities of PHCN to the unbundled successor companies.

    “The NCP directed PHCN to transfer its assets, employees, liabilities, rights and obligations to the 18 companies arising out of the unbundling exercise commencing March 1, 2006 and also adopted June 30, 2006 as the transfer date. Flowing from the above, the PHCN ceased to exist as of that date and should have been wound up immediately thereafter.”

    Regarding PHCN, the committee said by virtue of ESPRA Act 2005, it is an illegal body.

    The report said: “In spite of the above provisions of the law, the PHCN continued to operate, in direct contravention of the ESPRA Act 2005 as well as the gazetted orders at the NCP.

    “From the testimony of the CEOs of the unbundled companies, which was corroborated by the coordinator of PHCN liaison unit, it is clear that the transfers contemplated and mandated by the Act were only carried out cosmetically.

    “The continued existence of PHCN as an amorphous or inchoate agglomeration of dysfunctional and powerless successor companies or a resurgent NEPA is a clear violation of the law and is not imbued with any potential to grapple with the grave power challenges facing the nation.”

    “The PHCN is stinking of large scale corruption,” the committee wrote in its report.

    It went on: “The public hearing and site visits exposed high-level corruption and unspeakable inefficiency and waste in the execution of project and disbursement of funds meant for power projects.

    “From all available facts, a prima facie evidence of corruption and inappropriate disbursement of funds amounting to corrupt practices and economic sabotage have been established.

    “In spite of the cosmetic unbundling, nothing was done to check the culture of impunity that had eaten deep down into the administrative structure of NEPA/PHCN over the decades.”

    Another aspect of the report bordered on the funding of the controversial NIPP.

    The committee said the funding strategy was abandoned for withdrawals from Excess Crude Account by the Obasanjo administration.

    It added: “Contrary to the funding strategy for the MSPSND/NDHC/ NIPP projects articulated by the Steering Committee and the Presidential Implementation Committee of NIPP and approved by President Obasanjo in June 2005, funding for these projects became solely dependent on withdrawals from the Excess Crude Account.

    “From the testimony of the former Finance Minister Mrs. Ngozi Okonjo-Iweala and the Minister of State for Finance, Mrs. Nenadi Usman, funding of the NIPP from the Excess Crude Account was conceived as a loan to be repaid to the accounts of the Federal, State and Local Governments at a later date.”

    Confusion

    But the EFCC, in a report by its former Acting Chairman, Ibrahim Lamorde, cleared ex-President Obasanjo of any involvement in the NIPP fraud.

    The report of the anti-graft agency said in part: “After an in-depth investigation and rigorous check on all documents relating to these contracts, the payments made so far, and the contractors handling the project, it is impossible to draw a nexus between the former President or any individual or companies associated with him and the proceed accruing from the contract payments.”

    thenationonlineng
     
Loading...