HOW PLOT TO BLOCK $530M ABA POWER PLANT WAS HATCHED - BUSINESSDAY

 The power brokers behind the delay in the take-off of the $530 million Aba power plant have demonstrated what industry sources describe as greed and short-shortsightedness capable of jeopardising ongoing reforms in the power sector.

They include Emeka Offor, major promoter of Interstate Electrics Limited, new owners of Enugu Electricity Distribution Company (Enugu Disco); Namadi Sambo, Nigeria’s vice president; Sam Amadi, executive chairman, Nigerian Electricity Regulatory Commission (NERC), and Benjamin Dikki, director-general, Bureau of Public Enterprises (BPE).

Informed sources say these individuals, through deliberate or inadvertent ‘administrative errors’, complicated the issue of the Aba ring-fenced areas.

Geometric has been licensed to deliver power supply to Aba and Ariaria business units, just two out of 18 business units in the Enugu Disco licence areas. Emeka Offor is a government contractor and leading donor to the ruling People’s Democratic Party (PDP). Offor’s Interstate Electrics controls the remaining 16 units, which include bigger units like Onitsha, Nnewi, Awka, Owerri and Umuahia.

“Legally, Interstate has no standing in wanting to lay claim to Aba and Ariaria. Economically, it has a bigger cake, as it manages 16 business units. It is just a show of greed and short-sightedness on the part of Interstate,” said a source who stated that Offor’s connection to the vice president was beclouding him.

It would be recalled that following the resignation of Bart Nnaji as minister of power, BusinessDay had in its August 29, 2012 edition reported that the vice president’s deputy chief of staff, Mohammed Kachalla, had been mounting pressure on senior staff of the BPE with a view to influencing the privatisation process of the power sector. It was believed that the scheming was meant to weaken the solid controls put in place by the BPE and the Technical Committee on Privatisation, to ensure that bids were evaluated fairly and transparently.

BusinessDay had last year reported attempts by the Vice President Sambo-led National Council on Privatisation (NCP) to bend the rules of the privatisation of the Power Holding Company of Nigeria (PHCN) successor companies, when Interstate Electrics failed to meet the August 21 deadline for the payment of the remaining 75 percent of the bid value.

The company was said to have lobbied the NCP and BPE to get them to grant it an extension to pay for the asset, for which industry analysts said there was no moral justification, when similarly some investors were shut out at the preliminary stages in the same circumstances.

According to knowledgeable sources, the vice president has vested interests in Interstate Electrics, and “that is why they have always wanted Interstate Electrics to end up buying Enugu Disco. Until it got to Interstate Electric’s inability to make any payment at the August 21, 2013 deadline, the NCP and the BPE did not allow any exception. Even when Dangote was few minutes late in submitting its bid for Geregu and Shiroro, it was disqualified.”

In November 2012, the vice president had, through a memo, directed the BPE headed by Bola Onagoruwa to disregard the 2014 Memorandum of Understanding with Geometric Power, and the 2005 and 2006 lease agreements which ring-fenced Aba and Ariaria business units in favour of Geometric, but because she insisted that the contract should be honoured, she was asked to quit ‘with immediate effect’ on November 27, 2013, a development analysts described as curious in terms of the timing and very disturbing from an investor perspective.

Stakeholders had expected the NCP and the BPE to call in immediately the reserve bidder to make its pitch on the Enugu Disco. The BPE, in a statement, had noted that the deadline for payment remained Wednesday, August 21, 2013 as stipulated in the Request for Proposal (RFP), adding that in compliance with the tenets of transparency and accountability, the bureau would continue to strictly abide by the terms and conditions in the RFP. 

The eventual extension given to Interstate was said to have pitched the chairman, Technical Committee, NCP, Atedo Peterside, against the director-general of the BPE, as the extension would not only undermine the integrity of the transaction and the NCP, but would also translate into a financial discount to the preferred bidder.

According to the peace committee of the NCP, the BPE indicated that Aba ring-fenced was encumbered, yet it included Aba in its bid for the privatisation of the PHCN successor companies. The BPE did not remove the bid value of the Aba ring-fenced area. The committee also noted that NERC did not deduct the value of Aba ring-fenced from the valuation of Enugu Disco even though NERC was aware that Aba was ring-fenced and licensed to Aba Power Limited.

The Amadi-led NERC has said, though belatedly, that the right thing should be done, after a site visit to Aba Power Electric Limited and Geometric Power Aba Limited.

In a report submitted by NERC, seen by BusinessDay, the commission concluded that from the infrastructure already on ground at the generation plant, the distribution substations and lines, the GPAL and APL had gone a long way to meet their own end of the tripartite agreement. “It will be a disservice to the country in general and the company (GPAL and APL) in particular, after investing such huge amount of money on power infrastructure of such magnitude, to be denied the terms of the tripartite agreement.

A disregard of the agreement will cast bad light on the Federal Government’s privatisation process and send a wrong signal to other prospective investors in the power sector,” NERC said in its recommendation, adding that the tripartite agreement between Geometric, FG and PHCN should be upheld and made effective by excising the former Aba business unit from Enugu Disco licence areas. Sources close to the presidency tell us that the actions of the vice president in this Geometric power affair are unbecoming of his office.

“The vice president is acting like a common contractor,” said the source. “Instead of leveraging his considerable powers to win the hearts of the people of the South East for the president, by allowing Geometric Power to proceed with lighting up Aba, he chooses to be in cahoots with Emeka Offor to deprive the Igbo of electricity for their greatest industrial city.”