Reps power probe: Serious business or damaging ego trip?

Written by Hector Igbikiowubo
Saturday, 12 April 2008

THE ongoing power sector probe embarked upon by the House of Representatives Committee on Power continues to unfold at a giddying pace which has left most keen observers lost in transit due largely to the theatrics that has characterised the whole process. This report reviews the committee's inspection of some power projects
NOT only has the Godwin Elumelu led committee disputed figures put forward by the Central Bank of Nigeria, it has been observed that the ongoing tour and inspection of some power project sites embarked upon by the Committee is devoid of any empirically verifiable approach. The nature and manner of questions asked and the refusal of the committee to inspect procured power accessories during these visits indicates a negative mind-set.

Electtricity generation, Can NIPP deliver?
Also, contractors, NIPP representatives and the government contracted consultant are subjected to the worst kind of heckling imaginable by the committee and allegations of demand for bribe levelled against the legislators continues to mount. Worst still, some project sites are visited at night, raising questions as to the motive(s) of the probing legislators who tell journalists accompanying them that there is nothing to see. Keen observers and industry operators have opined that at this rate, not only have the probing legislators made themselves the issue, Nigerians may never get the much desired answers they seek as to why the power sector despite the seemingly huge resource allocation remain in its current level of development.
The expectation is that the committee should have secured the services of a consultant who has a well established pedigree in the award and execution of power projects. Indeed such a consultant would have primed and adequately briefed members of what questions to ask and what to look out for during site visits. But this has not been the case.
All of the sites visited so far by the committee have witnessed a repeat of the same scenario - contractors, NIPP representatives, government consultants and journalists are kept waiting indefinitely and when the committee does decide to visit, they spend an average of ten minutes during which they ask frivolous and at best mundane questions. Indeed a members of the committee while reacting to a question regarding the need to secure the services of a consultant to help in their probe dismissed the notion saying they (committee) knew all there is to know. Perhaps this underscores their degree of conceit or otherwise.
In his submission before the House Committee, Senator Liyel Imoke, the governor of Cross River State and erstwhile minister of power disclosed that the NIPP was conceptualized on a fast track government funded initiative to add significant new generation, transmission, distribution and gas supply capacity to the system.

He said originally, the generation component of the NIPP consisted of seven power plants including Gbarain-Ubie, Omoku, Egbema, Sapele, Calabar, Ihovbor and Ikot Abasi adding that proximity to reliable gas supply and access to the national grid was the underlying criteria for choosing these locations. The NIPP was also designed strategically different from previous projects because the immediate host communities within a five kilometre radius are expected to be connected to electricity direct from the plants.
Imoke disclosed that government subsequently included ongoing projects of the Power Holding Company of Nigeria (PHCN) including Geregu, Omotosho, Papalanto and Alaoji to generate an additional 7600 Mw. He explained that the NIPP also included four gas supply projects and over 100 transmission projects designed to add 6,290 MVA of transmission capacity at 330/132Kv, and 5,418MVA increase at 132/33Kv among other areas of coverage.
He disclosed that the NIPP is an inter-ministerial committee which does not fall under the auspices of the ministry of power procurement. The NIPP draws its personnel from the Ministries of Power, Finance, Petroleum, Gas and the National Planning Commission. The accounting office is vested in the chairman SC (minister of power). Imoke explained that the NIPP TC exists to prosecute the execution of projects while the Niger Delta Power Holding Company (NDPHC) was conceived to inherit the facilities developed and fine-tune the best mode of operating the plant once in service - build and transfer.
He said the ownership structure of the NIPP makes it unique within the power sector, adding that it is actually owned by the three tiers of government, with the Federal Government owning 52 per cent, while the states and local government owns the remaining 48 per cent between them. He explained that the ownership structure of the NIPP mirrors the national revenue sharing formula due to the fact that at the commencement of the project, the three tiers of government agreed to the funding of the NIPP from the excess crude oil receipts.
The board to which the management of the NIPP should receive direction is made up of representatives of the federal government, the state governments and the local governments. Imoke said it was anticipated that as a part of the reform process, when the NIPP plants are ready to be commissioned, they would either be given out on concession or privatised rather than be operated by the NIPP or PHCN.
Interestingly, Imoke also disclosed that the total projected cost of the NIPP was about $4.5 billion out of which a total of about $3 billion have been committed in the form of payment to contractors and the establishment of letters of credit, adding that only funds that have either been secured by Advance Payment Bonds or as payments for certified works have left the CBN. It was gathered that as at March, 2008, NIPP letter of credit report indicates a 29 per cent utilisation of those denominated in dollars and 14 per cent utilisation for those letters of credit denominated in Euro, and all other monies are safely within the control of the Federal Government through the CBN. Undoubtedly, if the conduct of the probe is anything to go by so far, the committee members are either ignorant of this much or they have deliberately set out to create mischief with the line of questioning and their style of plant visitation.
Sunday Vanguard further gathered that in the execution of the NIPP contracts, the government and the contractor are protected from the spectre of a failed project because the government is contractually bound to post an Advance Payment Guarantee (APG), while the contractor is also contractually bound to post a performance bond to the tune of 10 per cent of the entire contract which stands forfeit in the event where there is a default on his (contractors’) part.
Further checks revealed that all NIPP contractors are only paid advance after submission of an advance bank guarantee such that if the contract defaults or if the contract is terminated the entire amount is collected from the issuing bank without any reason; the letter of credit from government is also opened with a government banker (that is CBN) such that government retains control over it and not the contractor.
Indeed since the letter of credit is not secured, checks revealed that the following conditions must be met before the contractor is paid by the bank: proof of shipping (that the material is on the ship) on its way to Nigeria; FAT by consultant and release form to ship indicating the equipment was inspected and approved to be as per contract in the factory before it is shipped; original invoice and documents to be endorsed by two government representatives among other conditions aimed at protecting government. Clearly, the House committee appears unaware of these safety nets – especially given their insistence that billions of dollars has been paid out with nothing to show for it.
Sunday Vanguard checks further revealed that indeed the House Committee may have conveniently disregarded the contract information on most of the ongoing NIPP contracts to the detriment of government’s contractual obligations and the hopes and aspirations of Nigerians for improved power generation, transmission and distribution. For instance, the contract information for the Alaoji Combined Cycle 1074 Mw power plant being handled by Rockson Engineering Company indicates that the completion date for the simple cycle is slated for 15 August, 2009, while that of the combined cycle is yet undetermined owing to accompanying variation. Similarly, the contract information for the 338 Mw Egbema Simple Cycle Power Plant has a contract completion date of July 17, 2009.
The contract information on the Gbarain-Ubie Simple Cycle power plant also indicates a contract completion date of August 22, 2009, while even though government has not met its contractual obligations to the contractor for the 256Mw Omoku Simple Cycle power plant and cannot determine the contract completion date, the contractor expects to achieve project completion by July 2, 2009.

For the lot six transmission lines and substa tions including: Owerri substation, Onitsha substation; Owerri-Onitsha transmission line; Owerri-Alaoji Transmission line; Omoku-Egbema-Owerri Transmission line are yet to be determined owing to a number of constraints. However, the contract completion date for the Alaoji substation was determined to be February 28, 2009. Sunday Vanguard checks revealed that among other challenges, work stoppage at the Owerri substation was caused by Egbu and Uuodu communities owing to non-payment of land compensation by the NIPP; there has been delay in handover at the Onitsha substation; delay in enumeration and non-payment of compensation on Owerri-Alaoji Transmission line by NIPP; delay in enumeration and non-payment of compensation on Owerri-Onitsha Transmission line by NIPP; delay in enumeration and non-payment of compensation by NIPP on Omoku-Egbema-Owerri Transmission line resulting in work stoppage by Obrikom Etekuru and Umudike communities.
Interestingly, although the NIPP has established letters of credit to the tune of N8.197 billion representing 75 per cent of the entire Lot six contract value, owing to the safety nets put in place by government, the contractor Rockson Engineering is yet to receive any payment from the CBN. Unfortunately, the House committee remains worrisomely ignorant of this fact.
Recently, a consortium, Cartlark/Payma Bargh was compelled to take out a paid advertorial to repudiate allegations and imputation of project abandonment which they attributed to Mr. Godwin Elumelu, the Committee Chairman. The consortium said it was of the belief that all Nigerians and indeed the House Committee will benefit more from the investigation if there is a better understanding of the nature and complexities of the project and attendant challenges. Subtle as this may be, it underscores the Committee’s degree of understanding and appreciation of the challenges associated with ongoing power projects
. Cartlak/Payma Bargh Consortium is handling the Ikot-Ekpene & Afam 330/132Kv and 132/33Kv substations and 330Kv and 132 Transmission lines (Lot four).
Recently also Pivot Engineering, the company handling Lot eight which includes construction of the double circuit Transmission Line (Benin-Agbor-Asaba) and associated sub-stations at Benin, Agbor, Asaba and Nkalagu (extension), Lot 21-2 including the 132Kv Double Circuit Transmission line (New Haven -Nineth Mile - Nsukka), as well as Lot 13 including the 330/132/33Kv Ajah, Alagbon and Lekki substations was compelled to take out a paid advertorial to put issues concerning their handling of ongoing NIPP contracts in proper perspective.
The company noted that the ongoing probe by the House had thrown up some sensational but inaccurate news reports relating to the company.
The company pointed out that while the contract for Lot 8 was awarded sometime in March, 2006, advance payment was not made till late August, 2006, while a letter of credit was not opened till March 2007. For Lot 13 while the contract was awarded sometime in October, 2008, advance payment was not made by government till April, 2007. For Lot 21-2, the contract was signed in June, 2006 advance payment made in October, 2006 while a letter of credit was not opened till February, 2007.
Other factors militating against the completion of the projects includes: slow pace of approval of engineering design by NIPP, right-of-way stoppages by some communities owing to non-payment of compensation by the NIPP; regular changes of scope of work by the NIPP; lack of access to project site, e.g Lekki and the uncertainty associated with project funding by the NIPP. Without a doubt, the House committee does not have a clue as to the issues bedeviling the sector.


Source: http://www.vanguardngr.com/index.php?option=com_content&task=view&id=6599&Itemid=122

SegzyJoe:

Reps power probe: Serious business or damaging ego trip?

Written by Hector Igbikiowubo   
Saturday, 12 April 2008

THE ongoing power sector probe embarked upon by the House of Representatives Committee on Power continues to unfold at a giddying pace which has left most keen observers lost in transit due largely to the theatrics that has characterised the whole process. This report reviews the committee's inspection of  some power projects
NOT only has the Godwin  Elumelu led committee disputed figures put forward by the Central Bank of Nigeria, it has been observed that the ongoing tour and inspection of some power project sites embarked upon by the Committee is devoid of any empirically verifiable approach. The nature and manner of questions asked and the refusal of the committee to inspect procured power accessories during these visits indicates a negative mind-set.

Electtricity generation, Can NIPP deliver?
Also, contractors, NIPP representatives and the government contracted consultant are subjected to the worst kind of heckling imaginable by the committee and allegations of demand for bribe levelled against the legislators continues to mount. Worst still, some project sites are visited at night, raising questions as to the motive(s) of the probing legislators who tell journalists accompanying them that there is nothing to see. Keen observers and industry operators have opined that at this rate, not only have the probing legislators made themselves the issue, Nigerians may never get the much desired answers they seek as to why the power sector despite the seemingly huge resource allocation remain in its current level of development.
The expectation is that the committee should have secured the services of a consultant who has a well established pedigree in the award and execution of power projects. Indeed such a consultant would have primed and adequately briefed members of what questions to ask and what to look out for during site visits. But this has not been the case.
All of the sites visited so far by the committee have witnessed a repeat of the same scenario - contractors, NIPP representatives, government consultants and journalists are kept waiting indefinitely and when the committee does decide to visit, they spend an average of ten minutes during which they ask frivolous and at best mundane questions. Indeed a members of the committee while reacting to a question regarding the need to secure the services of a consultant to help in their probe dismissed the notion saying they (committee) knew all there is to know. Perhaps this underscores their degree of conceit or otherwise.
In his submission before the House Committee, Senator Liyel Imoke, the governor of Cross River State and erstwhile minister of power disclosed that the NIPP was conceptualized on a fast track government funded initiative to add significant new generation, transmission, distribution and gas supply capacity to the system.

He said originally, the generation  component of the NIPP consisted of seven power plants including Gbarain-Ubie, Omoku, Egbema, Sapele, Calabar, Ihovbor and Ikot Abasi adding that proximity to reliable gas supply and access to the national grid was the underlying criteria for choosing these locations. The NIPP was also designed strategically different from previous projects because the immediate host communities within a five kilometre radius are expected to be connected to electricity direct from the plants.
Imoke disclosed that government subsequently included ongoing projects of the Power Holding Company of Nigeria (PHCN) including Geregu, Omotosho, Papalanto and Alaoji to generate an additional 7600 Mw. He explained that the NIPP also included four gas supply projects and over 100 transmission projects designed to add 6,290 MVA of transmission capacity at 330/132Kv, and 5,418MVA increase at 132/33Kv among other areas of coverage.
He disclosed that the NIPP is an inter-ministerial committee which does not fall under the auspices of the ministry of power procurement. The NIPP draws its personnel from the Ministries of Power, Finance, Petroleum, Gas and the National Planning Commission. The accounting office is vested in the chairman SC (minister of power). Imoke explained that the NIPP TC exists to prosecute the execution of projects while the Niger Delta Power Holding Company (NDPHC) was conceived to inherit the facilities developed and fine-tune the best mode of operating the plant once in service - build and transfer.
He said the ownership structure of the NIPP makes it unique within the power sector, adding that it is actually owned by the three tiers of government, with the Federal Government owning 52 per cent, while the states and local government owns the remaining 48 per cent between them. He explained that the ownership structure of the NIPP mirrors the national revenue sharing formula due to the fact that at the commencement of the project, the three tiers of government agreed to the funding of the NIPP from the excess crude oil receipts.
The board to which the management of the NIPP should receive direction is made up of representatives of the federal government, the state governments and the local governments. Imoke said it was anticipated that as a part of the reform process, when the NIPP plants are ready to be commissioned, they would either be given out on concession or privatised rather than be operated by the NIPP or PHCN.
Interestingly, Imoke also disclosed that the total projected cost of the NIPP was about $4.5 billion out of which a total of about $3 billion have been committed in the form of payment to contractors and the establishment of letters of credit, adding that only funds that have either been secured by Advance Payment Bonds or as payments for certified works have left the CBN. It was gathered that as at March, 2008, NIPP letter of credit report indicates a 29 per cent utilisation of those denominated in dollars and 14 per cent utilisation for those letters of credit denominated in Euro, and all other monies are safely within the control of the Federal Government through the CBN. Undoubtedly, if the conduct of the probe is anything to go by so far, the committee members are either ignorant of this much or they have deliberately set out to create mischief with the line of questioning and their style of plant visitation.
Sunday Vanguard further gathered that in the execution of the NIPP contracts, the government and the contractor are protected from the spectre of a failed project because the government is contractually bound to post an Advance Payment Guarantee (APG), while the contractor is also contractually bound to post a performance bond to the tune of 10 per cent of the entire contract which stands forfeit in the event where there is a default on his (contractors’) part.
Further checks revealed that all NIPP contractors are only paid advance after submission of an advance bank guarantee such that if the contract defaults or if the contract is terminated the entire amount is collected from the issuing bank without any reason; the letter of credit from government is also opened with a government banker (that is CBN) such that government retains control over it and not the contractor.
Indeed since the letter of credit is not secured, checks revealed that the following conditions must be met before the contractor is paid by the bank: proof of shipping (that the material is on the ship) on its way to Nigeria; FAT by consultant and release form to ship indicating the equipment was inspected and approved to be as per contract in the factory before it is shipped; original invoice and documents to be endorsed by two government representatives among other conditions aimed at protecting government. Clearly, the House committee appears unaware of these safety nets – especially given their insistence that billions of dollars has been paid out with nothing to show for it. 
Sunday Vanguard checks further revealed that indeed the House Committee may have conveniently disregarded the contract information on most of the ongoing NIPP contracts to the detriment of government’s contractual obligations and the hopes and aspirations of Nigerians for improved power generation, transmission and distribution. For instance,  the contract information for the Alaoji Combined Cycle 1074 Mw power plant being handled by Rockson Engineering Company indicates that the completion date for the simple cycle is slated for 15 August, 2009, while that of the combined cycle is yet undetermined owing to accompanying variation. Similarly, the contract information for the 338 Mw Egbema Simple Cycle Power Plant has a contract completion date of July 17, 2009.
The contract information on the Gbarain-Ubie Simple Cycle power plant also indicates a contract completion date of August 22, 2009, while even though government has not met its contractual obligations to the contractor for the 256Mw Omoku Simple Cycle power plant and cannot determine the contract completion date, the contractor expects to achieve project completion by July 2, 2009.

For the lot six transmission lines and substa tions including: Owerri substation, Onitsha   substation; Owerri-Onitsha transmission line; Owerri-Alaoji Transmission line; Omoku-Egbema-Owerri Transmission line are yet to be determined owing to a number of constraints. However, the contract completion date for the Alaoji substation was determined to be February 28, 2009. Sunday Vanguard checks revealed that among other challenges, work stoppage at the Owerri substation was caused by Egbu and Uuodu communities owing to non-payment of land compensation by the NIPP; there has been delay in handover at the Onitsha substation; delay in enumeration and non-payment of compensation on Owerri-Alaoji Transmission line by NIPP; delay in enumeration and non-payment of compensation on Owerri-Onitsha Transmission line by NIPP; delay in enumeration and non-payment of compensation by NIPP on Omoku-Egbema-Owerri Transmission line resulting in work stoppage by Obrikom Etekuru and Umudike communities.
Interestingly, although the NIPP has established letters of credit to the tune of N8.197 billion representing 75 per cent of the entire Lot six contract value, owing to the safety nets put in place by government, the contractor Rockson Engineering is yet to receive any payment from the CBN. Unfortunately, the House committee remains worrisomely ignorant of this fact.
Recently, a consortium, Cartlark/Payma Bargh was compelled to take out a paid advertorial to repudiate allegations and imputation of project abandonment which they attributed to Mr. Godwin Elumelu, the Committee Chairman. The consortium said it was of the belief that all Nigerians and indeed the House Committee will benefit more from the investigation if there is a better understanding of the nature and complexities of the project and attendant challenges. Subtle as this may be, it underscores the Committee’s degree of understanding and appreciation of the challenges associated with ongoing power projects
. Cartlak/Payma Bargh Consortium is handling the Ikot-Ekpene & Afam 330/132Kv and 132/33Kv substations and 330Kv and 132 Transmission lines (Lot four).
Recently also Pivot Engineering, the company handling Lot eight which includes construction of the double circuit Transmission Line (Benin-Agbor-Asaba) and associated sub-stations at Benin, Agbor, Asaba and Nkalagu (extension), Lot 21-2 including the 132Kv Double Circuit Transmission line (New Haven -Nineth Mile - Nsukka), as well as Lot 13 including the 330/132/33Kv Ajah, Alagbon and Lekki substations was compelled to take out a paid advertorial to put issues concerning their handling of ongoing NIPP contracts in proper perspective.
The company noted that the ongoing probe by the House had thrown up some sensational but inaccurate news reports relating to the company.
The company pointed out that while the contract for Lot 8 was awarded sometime in March, 2006, advance payment was not made till late August, 2006, while a letter of credit was not opened till March 2007. For Lot 13 while the contract was awarded sometime in October, 2008, advance payment was not made by government till April, 2007. For Lot 21-2, the contract was signed in June, 2006 advance payment made in October, 2006 while a letter of credit was not opened till February, 2007.
Other factors militating against the completion of the projects includes: slow pace of approval of engineering design by NIPP, right-of-way stoppages by some communities owing to non-payment of compensation by the NIPP; regular changes of scope of work by the NIPP; lack of access to project site, e.g Lekki and the uncertainty associated with project funding by the NIPP. Without a doubt, the House committee does not have a clue as to the issues bedeviling the sector.   


Source: http://www.vanguardngr.com/index.php?option=com_content&task=view&id=6599&Itemid=122

why you do not open a Private TV station for casting. this text is too long my guy

@FMK,

As you can see, am not the writer of this report. This is a SPECIAL REPORT of the Vanguard Newspaper covering the ongoing power probe. I decided to post this report because of various frivolous allegations and disputations between the probing legislators and some of the contractors that leave most of us confused and perpelexed.

Though its long but I think its worth the information. thanks