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Please read Thru. the Minister in charge at the NIPP conceptualisation
Imoke opens up on power sector spending: Yar’Adua, Bankole misinformed!
Sunday, 11 May 2008
Says $2bn spent on NIPP; $1.2bn in CBN
Faults Reps overpayment claims
'Why we waived ‘due process’ on contracts’
Mr. Liyel Imoke was visiting the US, and I was alerted on this very fact by a mutual friend. It was my opportunity to confront him on the now vexed and very charged question of the power sector, especially given the background of the probe currently going in the House of Representatives. Imoke was chairman of the Executive Board inaugurated by former President Olusegun Obasanjo to manage the power sector, and from 2003 to 2006, was minister of power and steel, under whom the controversial National Integrated Power Project, NIPP, was established. I flew to Baltimore from St. Louis to interview Imoke and teased out important and frequently obscured perspectives on the Nigerian power sector from him. Imoke was forthcoming, and speaks for himself, in this interview, in which he defends his position in the contracts, management, and execution of the national power projects.
I’LL like to start from one first principle. And that’s this, that Nigerians are very angry over this power question. People say so much money was spent and nothing is there to show for it. And you were minister for power for a long time. What’s this story?
Speaker BankoleI was minister for three years. Just over three years. I was superintending, largely in that tenure, towards the second half of that tenure, when the focus was on the NIPP, which was designed as a fast track programme to address the problem of power supply. But I think the place to start is how much was really spent? When we talk of spending on power, how much did the Federal Government actually spend on projects aimed at improving power supply? And I think the accountant-general of the federation has given those figures. And it has been clearly stated that they’re in the region of $6 billion
But where is the $16 billion coming from?
The $16 billion is an utterance of the speaker of the House of Representatives that doesn’t seem to have any basis, with all due respect. He did not say he got it from the accountant-general; you know what I mean. So the $16 billion doesn’t exist. And if $16 billion was spent, it ought to be probed. But it was not spent. Certainly not anywhere near.
I need to be clear on this because this is very crucial. I know there are discrepancies in figures. I mean the president says $10 billion was spent, and the speaker says $16 billion…
The most authoritative source is the accountant-general of the federation. Actual spend. He was not even talking about the budget proposals or the amount allocated, you know. Actual spend. The most authoritative source in any government is the office of the accountant-general because government spends money based on warrants that are issued for expenditure to be incurred. So that is the most authoritative and most authentic source of information as to actual spend.
So, you are specifically contesting the fact? You are saying that $16 billion is figment.
Of course it is!
So how much are we talking about?
I think we are talking about $6billion, which when you consider the magnitude of the problem and the fact that your projects are incomplete, you understand. You’re probing a project that’s due for completion in 2009.
You are talking specifically about NIPP?
No, I’m talking about total spending on power.
Total spending on power, not this dedicated project called NIPP?
No.
How much was spent on NIPP?
NIPP has about $3.2 billion total spending out of the total $6 billion.
Oh okay, so this is even more interesting.
Yes. NIPP is only $3.2 billion and of that $3.2 about $1.2 billion is still sitting in letters of credit at the bank unutilized.
$1.2billion?
Yes, unutilized.
In the Nigerian Central Bank?
Yes. So only about $2 billion on NIPP. And the project is still on-going. And it’s being probed.
Now, so where is the story coming from? What is the source of the story? I mean, because we often get the impression that there is some form of coordination in the government’s accounting process. So whom should we trust?
I mean, who else would you trust? Who else but the accountant general of the federation, whose mandate and responsibility is to give accounts of Federal Government spending? Which other authority?
I find it interesting because when I see the president of the federation make a statement about money spent and he specifically mentions $10 billion, it contradicts this current claim, and I get the point that you make about the accountant general and responsibilities in government. But how did the president come up with this figure? From where did he generate it?
I believe that some of his advisers may have put together some numbers trying to make a strong case for a particular group to come in and invest or for private sector participation and the higher the figure you put out there, the higher the stake. So, what that group may have done which cost somebody his job already, he tried to clarify the money spent and he lost his job, a lot of people are forgetting that.
Now, what you’ve done is that you’ve now tried to add figures like what is generated internally by the utilities from the sale of electricity and you’re calling it spent on capital budget, it’s not correct, it is what is generated internally by the utilities, it is used to pay staff salaries, it is used for maintenance; it is used to pay for electricity that is delivered from the independent companies and it is used to pay the gratuities and pensions of staff.
Now this is all added and called, “spent on power,” okay, to make up for the $10 billion. And what the Nigerian Gas Company is spending on Nigerian Gas Company; spending on gas development projects to supply gas to the power plants is now also being added on as money spent on power. All this is now being put together to make up to the so-called $10 billion.
What you’ve just told me is that there is a lynch mob in government
Now you’re getting it, (general laughter)
And the target is the power sector?
The target is not the power sector, I wish it was but I think that - (laughter). The target is somewhere else.
But then also from the point of view of the layman, $3.2 is still a lot of money.
It is a lot of money.
It’s not sawdust
It’s not sawdust, but if $2 billion is tied up in projects that are on-going; out of the $3.2 billion you have not one project that is on-going, how will Nigerians enjoy the benefit of the project? It’s not as if the $3.2 billion was allocated and you said okay, the first $200 million, use it to complete project A and the second $200 million, use it to complete project B, the $3.2 billion is spent on 500 or so projects.
There are over 400 on-going projects that when completed will deliver the result of that investment, and I’m telling you that these projects are due for completion come 2009, okay? But they haven’t received any funding or support since May 29, that’s 2007, so …
But you do understand why Nigerians are angry, especially in the light of the statement credited to you, that we can’t expect to have full power till 2050.
I never made such a statement. I made a statement in which I said if the Nigerian economy is growing at 10 per cent per annum, and we set that as target, at the rate of current investment into the power sector, in the next fifty years we’d not have caught up.
I gave a recent example. So, we need to be spending more than the rate of our current investment in the power sector, otherwise we’ll find that with our economy - because recently I gave the example that between 1999 and 2007 - eight years; let’s say there’s been an average growth rate of five per cent, that means in those eight years, our economy has grown by 40 per cent, and our power supply has not grown by anywhere near 40 per cent, so that was the correlation I was trying to make. So, if you’re going to grow your economy, your power supply plan has to also take that into consideration, and you must plan to grow faster than 10 per cent per annum, to keep up and if you don’t do it, in 50 years, you’ll not have solved the problem.
So, here we’re faced with a certain conundrum which is that we don’t seem to have full picture or proper grasp of the power situation.
No, we don’t.
Alright, and as a result, we also don’t have full control of our power infrastructure; and it also seems like the current method of investments in the power sector might seem, to some critics, like pouring water into a massive hole.
Yes. But the government has to make a decision on whether it is going to invest in power; whether it is going to allow private sector make the investment, and allow the tariffs to become less affordable, you understand. Now, does the government have the political will to allow tariffs go to market pricing; where you have competitive prices?
But no government anywhere does that.
There’s always some form of public subvention to energy consumption.
Now, if government is not going to do that, if government will continue to invest, how government does that investment is up to it; either directly or through funding private sector, okay? Now government is looking at the option of funding private sector to deliver the service, so the government will now hand the money; the fund available to the private entities to do electricity. That’s one option.
Now, that private sector would want some guarantees because they also want to make some investments, it’s not as if the government is going to bring 100 per cent of the funds, okay, so the Federal Government has to provide some sort of fund or escrow account that guarantees, that if I can’t collect this from the consumer, that I would pay you. It’s a big challenge, it’s not like the telecoms.
And for us, where we don’t… for a country that does not have the type of access … we are talking about 40 per cent of people in Nigeria that have access to electricity. So you don’t want to come up with a policy that makes it difficult for the remaining 60 per cent to get access, you understand, because private sector is not going to put electricity in your village because the government said so, they will only do it if they see that there is a return. But coming back to the issue of power. No power station was built in Nigeria since Shiroro. The last power station ever built in Nigeria was the Shiroro Dam, which happens to be a picking station.
A picking station means that it is available, if you’re lucky, at full capacity, four to five months a year, and that was completed in 1987. And since 1987, we haven’t had one new facility.
Increasing
capacity
The same thing with Egbin. Egbin was commissioned in 1985. Even Delta Four commissioned in 1990. Now, up until that time, and after that time, through the 2000s, 10 years after that, let’s assume that our economy grew by three per cent annually, that means that in 10 years our economy has grown by 30 per cent and we have not increased our capacity by one megawatt. Not only have we not even increased our capacity by one megawatt, these are bloody machines; they break down, our maintenance capacity was low; we cannot refurbish turbines in Nigeria; we have to send them to Europe to be refurbished, even as I speak to you. So the sector was in very poor state.
In fact, when I first got into the power sector as chairman of the Technical Board, generation was at 1, 700, 1,400, okay, now Nigerians have forgotten that we got it up to 4000 by the end of 2001 going into 2002.
And, at that time, I said that we were still not going to have uninterrupted power supply, people came down on me that this man has said that there will be no uninterrupted power supply (laughs). Now, I left the sector in 2002, end of 2001 going into 2002, and, of course, minimal investment came in, because, at that time, they said, ‘okay, let us pass the electric power reform bill into law and get private sector to come in and do the business’.
The National Assembly sat on the Electric Power Sector Reform bill from 2002 till 2005. It was passed in 2005. We still have challenges. Now realizing that you can not continue to overhaul, if you look at so-called 6000 megawatts that we have, it includes the 1959 plants built in Afam, and…
That’s installed capacity?
The so-called installed capacity of 6000; it includes all the obsolete equipment and plants that can never deliver one megawatt. That 6000 megawatts includes Oji River. So when you look at the practical capacity, it is in the region of 4000. So, that’s what we tried to deliver at that time. But we also knew that it was not sustainable. First of all, we overhauled about, maybe 30 units, and got them back working, but the ones that were not overhauled were due for overhauling, and they have not been overhauled.
And they are beginning to break down. So the sector has not been funded, either by the private sector or public sector, because of this debate on whether we should privatize or not; and, of course, public sector is inefficient when it comes to management of these things, there is no doubt about that. But having said that, you have a situation where without any real investment going into the sector, gradually these units are beginning to depreciate.
Some of them are just taking themselves out: ‘hey! I’ve had it!” And they are going out. So it’s dropping. You see, you can’t blame….Unfortunately, Nigerians need to hold somebody for not having light. And it appears convenient, you know, that you can point at the man who just left, you understand what I mean, and say, ah! that man was there for eight years and he didn’t solve this problem…
Talking of which, in the media, it looks as if you are still the minister of power…
(laughs) Indeed, I’m still treated as if I’m the minister of power and steel, yes.
Which leads to my next question. How do the goings-on affect your duties? For crying out loud, you’re the executive governor of Cross River State. So, do you get to do the job that you were hired to do by the people of Cross River State?
Exactly. It’s bit of a distraction. But I think also that once you have been in public office, you should be held accountable for your own acts. I should be able to explain them. So to the extent that I have found it necessary to explain what took place in the sector, I have done that, without cost really, to my current duties as governor of Cross River State.
Some of your brother governors in the South-south have made some statements recently regarding the probes or the reviews taking place by the power committee of the House of Reps. How do you see it? Are they looking for a solution to our power problem, or are they looking for scapegoats? Does the process seem mysterious to you? I mean with all these revelations…
I don’t think that there’s any mystery to it. I think that, probably, you know,…I mean, at the risk of sounding immodest, I think the procurement processes for all our power projects under the NIPP, were probably as good as any procurement process that any government has ever embarked on in the more transparent places in the world. You of course hear there was no due process…
Now I was coming to that. Was there really transparency? Was there due process in your procurement and contract processes?
Of course there was due process! And everything I say is backed by…look, all you need to do is check the records. The adverts that we placed in the papers; those who responded to the adverts that we placed in the papers; the process for evaluating bids; the technical evaluation and pre-qualification, the financial evaluation, the public opening of bids; the bids that were selected and sent to the due process office; each one, each contract certified by the Due Process Office. Aha! And so, we went through the entire due process regime.
How then do you respond to Mrs. Okonjo-Iweala’s statements, or evidence before the committee of the House of Reps, about the waiver on payment?
About waiver on payment. Having completed your due process certification; that is you’ve met all the requirements for due process certification, the memo goes to the Federal Executive Council, which is the highest authorizing body, and receives approval, having gone through all the due process. Now, you’re supposed to go back to the Due Process Office to say, okay we received FEC approval, give us another certificate to effect payment.
That’s it. It is a bureaucracy! Now, we said, this project is fast track basis, and if each contractor, and in contract line there may be 15 to 20 payments, so if each contractor has to go back to the Due Process Office 15 to 20 times, and it takes one month for him to get a certificate for payment, and due process certificates for payment are not recognized in international financial transactions; so if you open your letter of credit, HSBC or JP Morgan are not looking for your due process certificate for payment from the due process office.
So if all this is going to constitute a bottleneck, why can’t we waive this, since we were opening letters of credit? Because the contractor can’t get paid unless he achieves a certain milestone. You can hold the international bank responsible for making a payment if the contractor has not achieved a contractual milestone.
So the waiver was tied to?
To those payments going back and forth
So, it was not an arbitrary process?
No!
Okay. So, here is a question that I, and I think most Nigerians are very interested in. How much was paid to contractors, and how much work was done, given the waivers?
Each contractor gets 25 per cent advance payment, but to get that 25 per cent advance payment, you must come with a bond from a first class bank; an advance payment guarantee, which has very strict terms. So that if he applies the funds, because when he brings his advance payment guarantee, the funds are paid to the bank; they are domiciled to the bank; so if the contractor collects 25 per cent from the bank and doesn’t perform, the federal government has a guarantee from the bank and can call the guarantee up, and get back their money.
Easily. So the banks themselves being very aware of this, have hardly released this money to the contractors; they keep the money and actually vet, to see what the contractors are procuring and what is being executed; because the funds are released by the federal government to the banks in the name of the contractor.
Now, if, well, I’d hold you by your words that the process was transparent.
Yes.
Okay. Taking a look back, if you were to reassess every process that went into decisions about the design, and the implementation of projects under your watch, what would you not do in the same ways, or what would you do differently? Is there anything that you would do differently?
I’ve been in the sector for a while. I was in the sector at the Executive Board. I was minister in 2003 and NIPP started, 2005. So I had a enough time to understand the sector. Now, we implemented the project at what we thought was the best cost, and the most realizable programme we could come up with. Most projects in Nigeria are effected on a turn-key basis. So you bring one contractor, either a Siemens or an Alscon, and they design the station, and they build the complete turn-key contract; they do the entire thing. You just fold your arms and they deliver the project.
The only problem is that they are delivering it at about fifty percent more in expense. Now a lot of these projects were in the Niger Delta areas where the gas is, because we decided to locate them close to the source of gas. And the GEs were not ready to now go and engage in the construction, in the Niger Delta. So, we had to separate equipment supply and engineering procurement and supply. So it’s not a turn-key contract. The turn-keys would have cost us more, and we probably would not have delivered anything any differently.
And so to me, I think that we took the best approach; and what we need to do for a project like this is to have tremendous political will to deliver the project. If you have tremendous political will, you can drive it; because there are challenges. The challenges the NIPP faces are not challenges of how much was spent, it is a challenge of not being able to fund a few things. Basically, with another $500m, you could probably complete the project. So, why? Where does the money go to, the $500m?
And comments from readers of the article:
Character Assasination
Written by M.B.A.AyoxThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it , on 11-05-2008 17:53 , IP: 64.136.27.228
Wow! This seems very analytical and informative. If only our people will give the truth a chance. But no. All they want is a scapegoat and ALL that the media want is headlines to grab readers / listeners whether factual or not. When you listen to Mr. Governor on the Power Sector Issue and Mallam El-Rufai on the FCT issue, You wonder why we are persecuitng the Consciencious amongst us? Also, can our press do a little bit of investgative jounalism instead of being a willingly tool of people with ulterior motives? They need to empathize with the people they are spreading lies, half truths and character assasinations about. If we want people of integrity to answer the call of service to the nation.
Peace.
M. B. A. Ayox.
2 I believe you, but,
Written by Mohammed SadiqThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it , on 12-05-2008 08:42 , IP: 217.194.157.134
I sincerely commend Senator Imoke for having the strength of mind to clarify these issues whereever and whenever the opportunity comes up.
I believe him that there is a group of (political) power brokers that want to paint the activities of the past administration on power black - a sort of giving a dog bad name in order to get it hung. It is still the same people who \'manufactured\' figures and put it forward to the present administration to mislead it into making drastic decisions to be regretted later.
I also believe him that the method of procurement for the NIPP projects are justified. Due Process Certification was obtained from the BMPIU Office of the Presidency, sometimes at the detriment of the pace of work on these projects - and I HAVE PROOF to this effect.
My only problem with Senator Imoke is the manner with which he decided to DUMP the brilliant, hardworking and loyal Engineers that spent hours and hours, deserting family and social life, spending unending nights in the office to ensure the success of this project, without justifyable method of compensation.
These people were ordinary civil servants who eschewed bitter working conditions because of their belief in this project and its outcome, and worked harder than ever before because of the leadership potential that Sen. Imoke has initially demonstrated.
They thought they were selected among their colleagues to be outstanding, to deliver outstanding performance to an outstanding achievement. But at the end of the day, they ended up a laughing stock among colleagues - without renumerative compensation. All because Sen Imoke \'forgot\' to set up a compensation structure for them.
3 Thanks Imoke for speaking out
Written by Boboye EricThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it , on 12-05-2008 10:25 , IP: 41.220.117.106
Yar'dua and Bankole should not act on what they have been told but investigate to make sure that whatever statement or action they take truthful.
4 Mr.
Written by Dickson OnyiaThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it , on 12-05-2008 10:54 , IP: 134.146.0.22
I know certainly that the power probe'll be on voice mail soon.If Bankole doesn't have bases don't forget that Govt.expenses are approved by the National assembly,or if a project is said to be completed in 2009 is there any reason to abandon it in 2008?You so called leaders should be up and doing don't ever think that Nigerians are fools because we don't want to die.But I must state here that there was no proper feasibility study of the said project before it was embarked upon otherwise there is ultirior motive somewhere,if not there is no reason whatsoever for project that is said to be completed in 2009 to be abandonmed in 2008.
5 Power probe? Yes, but ,
Written by John Odey OkacheThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it , on 12-05-2008 12:28 , IP: 196.207.13.140
I think the present govt is probe-happy but the power situation in Nigeria is worsening by the day. It is necessary to probe the previous govt for accountability but probing is not one of the functions of govt. Present govt should solve the energy crisis without further delay, or else continue to probe its predecessor till eternity.Nigerians voted so govt would help them catch fish and not to spend a four-year term loosening highly knotty and intertwined fishing net.
6 Too much of ignorance
Written by Kurgo Sherengbe Ayuba writing This e-mail address is being protected from spam bots, you need JavaScript enabled to view it , on 13-05-2008 00:14 , IP: 77.102.194.74
I think though many Nigerians climed to be educated, yet we hardly can see rational thinking in their submission on this matter of power probe. People say all kind of things but the fact remains that the authenticity of the allegations has not been yet established. When a matter is an allegation, we should not run fast in our conclusion. The honourables in the house of reps must be careful because this may mare their political carreer if it turns our to be a farce. Objectivity must be maintained and they cannot conclusively determined whether or not there are corruptions in this project until a full investigation has been done and that too has been scrutinized by a judiciary process and found to be indeed fraudulent. As we listen to the reps, we must also listen to those involved as players. Let us know with evidences how much was involved, all those making noise are not accounting officers nor auditors, so we must be careful in taking every information hook. lime and sinker.
7 What is Imoke talking about?
Written by owolabiThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it , on 13-05-2008 07:06 , IP: 92.12.39.222
Baldadash! That is what Imoke is saying.Some of his submissions here were not expressed at the Probe Panel Enquiry, so it is double-speak.
8 Sublime analysis
Written by Jide Oluwafemi, on 13-05-2008 08:21 , IP: 208.74.114.90
This is a sublime analysis of activities of a viable project, i hope the touts in House of Assembly will able to comprehend it.
They need to go back to school like OBJ did, he is more brainy than all of them from what i read from his letter to the House.
Look before you leap, Elumelu
9 Always refreshing
Written by tunde belloThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it , on 13-05-2008 18:33 , IP: 213.181.87.74
I tried to follow senator Imoke"s submissions at the Elumelu panel.After reading today"s interview, I can"t help but feel that Yar'Adua"s government is content to go on a wild goose chase whilst the nation lies postrate in utter darkness.Please, senator, use your PDP connection to make the President get a move on and fix our power sector.
10 Proud of you, Gov. Imoke
Written by Fr. Victor OwanThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it , on 15-05-2008 05:36 , IP: 24.29.227.25
Having just read the interview with Gov. Liyel Imoke, I couldn't hold back congratulating him for such thorough and clean, as well as honest answers to all the questions asked. Without any bias, I have always known him (though from a distance) to be a man of integrity and uprightness. He's one Nigerian within the corridor of power that I am proud of. Keep up the good work, Gov.
Fr. Victor Owan
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Last I heard , he was sick 
