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Friday, 17 April 2015

Travails of Aba Power Project By Prof Barth Nnaji

Prof Barth Nnaji

The 141megawatt integrated Aba Power Project is a child of necessity.  The desire of Aba industrialists, including the small and medium scale industries, and our desire to contribute our quota to increasing power supply in the nation converged 10 years ago.

We realized that the best way to ensure that this city will quickly have reliable and affordable electricity was to build this off-grid project that serves the Aba metropolis.

The then World Bank President, Mr Jim Wolfensohn, and the then Finance Minister who is the current Finance Minister and Coordinating Minister for the Economy, Dr. (Mrs.) Ngozi Okonjo-Iweala, came and met the Aba Industrialists, including the Aba Ariaria Manufacturers (SMEs). At the meeting, the Ariaria manufacturers were asked to identify their number one problem which if addressed would significantly improve their production; they unanimously said that it was reliable electricity.

This convergence of desire for reliable electricity was what led us to this historic Aba Integrated Power Project. At that time, our development partners from the IFC of the World Bank, the European Investment Bank (EIB) and the Emerging Africa Infrastructure Fund (now known as FMFM) and myself wanted to find a business model for power development in Nigeria that is sustainable, can stand on its own, and can be easily replicated by various investors in other major cities in Nigeria. We recognized that the nation would not be able to afford sovereign guarantee for all of its power needs, we therefore developed a model of customized embedded generation that would not require sovereign guarantee.

Consequently, we set about developing this integrated power project to satisfy the electricity needs of Aba metropolis at a time when the Power Sector Reform Act of 2005 was not yet enacted. The Federal Government in 2005 concessioned Aba metropolis to us; this was the only security of the investment in the project instead of the normal sovereign guarantee. We have met the terms of our concession agreement with the Federal Government by building this 141MW Power Plant with state of the art equipment from General Electric (GE) and rehabilitating the entire distribution network in Aba.

In addition to the power plant, we have built over 105 kms of 33kV overhead lines within the Aba metropolis. The steel tubular poles used to build the 33kV line infrastructure are unlike any other in Nigeria. We have also built over 40km of new 11kV lines in Aba. We have completed 5 new substations consisting of the power plant’s 3x60MVAs substation; four (4) brand new 2x15MVA substations in various parts of Aba town. In addition, we have refurbished the only three existing PHCN substations which were dilapidated, by building three brand new control buildings with outdoor substation gantries within the premises of the existing PHCN substations. To ensure the reliability of gas supply, we built a 27km gas pipeline from Imo River to the power plant and built the gas infrastructure to support the supply of reliable gas to the facility. To date, we have invested over $500million or in today’s money over N100 billion in this project.

This project is virtually completed. The power plant, various substations and 33kV lines have been energised and fuel is available for this project.  The remaining interconnection work on the distribution network within the premises of the existing PHCN substations and the 11kv lines should take less than two months. This was the remaining work that was being done by our contractors before the entire Enugu Electricity Distribution Company was handed over to another party by the Bureau of Public Enterprises (BPE) without excising Aba from the sale. This action was in spite of our valid concession agreement and assurances by President Goodluck Jonathan that the agreement is sacrosanct. 

Operators of EEDC stopped our work and chased away contractors from the substations, thereby preventing  Aba people from having uninterrupted and quality electricity. The BPE, in effect, double-sold Aba metropolis (which includes Aba and Ariaria Electricity Business Districts) to our company and to Interstate Electrics. This is in spite of the very fact that the agreement we have with the FGN clearly states that whenever there is privatization, our company has first right to purchase the facility in Aba hence our heavy investment in this project.

Investors in Aba IPP have developed a world class electricity infrastructure with the belief that their investment is safe in Nigeria. We have made all effort to get the BPE to correct what (for choice of words) may be called an “error”. So far, they have not yielded to doing the correct thing. Rather, they have sought to justify this error and have continued to politicise the situation unnecessarily, thereby playing with the investment of this magnitude by people who have the interest of our country and the people of Aba at heart.  Investors in the Aba IPP led by my humble self answered the call of our beloved country to come home and be part of the development of our dear nation.

The investors and stakeholders include members of the Aba Business Community, the United States Agency for International Development (USAID) and our banks, especially Diamond Bank. This travesty has been very cruel to all of us. People in the investment community continue to wonder if this can happen to Nigerian investors with a well-structured agreement, how then can they be sure that their investments and agreements will not be breached in the future? This action by the government has certainly demoralised and discouraged potential investors.

The only instrument for doing business in developing and developed nations across the globe is an agreement, which must be respected and held sacrosanct by all parties. All the various Committees set up to look into this issue have come up with the same answer: that our agreement should be respected by the Federal Government and that Aba Power should be offered the Aba and Ariaria Electricity Business Districts as enshrined in the agreement. I was assured by the outgoing Vice President that the Technical committee of National Council on Privatization (NCP) and the NCP Legal Committee have made the same recommendation. However the painful fact is that this critical issue has been left festering since November 2013. It costs our company $3.5m (Three and a half million US dollars) in bank interest charges alone; plus more than N30 million for insurance coverage; other operational expenses every single month to carry a project that is not yielding any revenue due to the deliberate, hostile and crippling action of Enugu DisCo and the BPE over 15 months ago!

So far about 8 committees, including committees of the NCP, NERC, and Ministry of Power amongst others have investigated this matter and come up with the same recommendation. There is no more need for another committee; all that it requires is your decision and firm action that will ensure the full implementation of their recommendation to sell Aba metropolis to Aba Power. We are therefore pleading with the authorities to take a decisive action today and rescue our company and the people of Aba from the shackles of deliberate man-made mischief.

We also plead with you to ask Enugu DisCo (EEDC) to immediately allow our contractors to complete the interconnection works that will allow Aba to receive this power. Please give the people of Aba an opportunity to get the intended benefit of this project, which is absolute reliable electricity. It is unfortunate that the powerful economic and political saboteurs within the system have denied your administration the golden opportunity of using the Aba metropolis electricity ring-fence as a shining example of your power reform agenda. Nevertheless, we remain fully committed to ensuring that this project will be completed as soon as possible for the benefit of Aba Business Community and the Nigerian people.

-Prof Nnaji, NNOM, OFR, the immediate past Minister of Power and one of the world’s top engineers, is Chairman of Geometric Power Ltd.

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