http://www.channelstv.com/home/2012/07/10/fashola-demands-refund-of-n16-billion-illegal-deductions-on-power-by-fg/

The governor of Lagos State, Mr. Babatunde Fashola on Tuesday called on the Federal Government to refund the N16 billion deducted from its allocation from the Federation Account over its investment in power.

Claiming the nation’s economic capital has been unjustly treated in the on-going privatization exercise, especially, when it comes to privatization of assets. The governor asserted that if the nation must make a success of the privatization exercise in the Power Sector, it must start from Lagos

Mr Fashola made the lamentation about the alleged plight of the state while playing host to the members of the Senate Committee on Privatization which paid him a courtesy visit.

Explaining the genesis of the N16 billion illegal deductions, the governor explained that the state government invested in power plant, yet the power was not dedicated to Lagos, “but they (FG) have deducted about N16billion of our money in spite of court orders.” “Now, we get punished for taking the initiative” he added.

“There is a standing liability to us by the PHCN, the illegal deductions of N16 billion for power that we did not get, for the power that other states used. Now, those are issues of social and economic injustice that must be resolved before we can even have a successful privatization exercise. We are in court and there is arbitration”, the Governor said adding that he has written to the National Assembly to say that those are “red flakes to the successful completion of the exercise.

The governor however warned that as much as the state government supports the privatization exercise, if the money was not refunded, it would constitute clogs to the successful execution of the exercise.

Noting that the debt would be part of the due diligence obstacles for any concessionaire to cross, Governor Fashola warned, “If our money is not paid, clearly there will be issues of financial caution, I can tell you that”, calling on the Committee to persuade the National Assembly to make appropriation to refund the N16 billion to Lagos State.

“”It is no longer a question of who is right and who is wrong. The impact of Power to the National Economy is more than N16 billion”, the Governor said, adding, “Now, if the PHCN workers that went on strike at the onset of Power Reforms were paid, why should we not be paid because we did not go on demonstration; we are being civil”.

Governor Fashola insisted that for the privatization of the Power Sector to be successful, “We must put our best foot forward in Lagos because the Power demand is here, the Power assets is here”, warning that if the Federal Government should put on the attitude of “we can do it without them”, there would be problems ahead.

“Most of the distribution assets are here, we have invested in transformers, feeder pillars, poles, cabling and others. Those are the distribution assets any concessionaire is going to use. We have a transformer manufacturing company in Lagos where we are producing transformers and distributing to communities”, the Governor said pointing out that so far the electricity regulatory company has come to inspect the assets.

Noting that there is a provision in the Constitution that allows states to distribute power in areas not covered by the National Grid, Governor Fashola said such areas were not defined and called on the Committee to take up the task to legislate on such issues so that concessionaires and private investors would know which areas to invest in distribution.

The Governor also called on the Committee to assist to create “Greenfield Power Distribution Companies” saying they would act as backups for the 11 distribution companies carved out of the PHCN.

“It is not enough to say that the 11 distribution companies carved out of the PHCN are the only ones because if you look at the NITEL story, it was the Greenfield telecommunications companies that ultimately baled us out of our problem. So we must have Greenfield distribution companies that carry no baggage.

Federation’s orphan

“We have been given the short end of the stick consistently. Given our contribution to the national economy, there has been no reciprocity. Our assets and our lands have been servicing the nation; these lands were there before they were acquired by the Federal Government for government business and we are saying, if they are no longer serving government business we are supposed to take our land back”, the Governor said.

Describing it as social injustice, Governor Fashola said Lagos State has been “the orphan of the entire Federation”, adding that the Federal Government took the State’s assets and gave nothing in return in spite of the fact that the State contributes the highest quota to the Gross Domestic Product (GDP) of the country.

Earlier, in his opening remarks, Chairman of the Committee said the Committee was in Lagos to inspect the Egbin Thermal Station in Ikeja and the Eko Business District as part of its oversight functions on the processes for the Privatization of the Power Sector.

According to Senator Obadara, the Committee paid a courtesy call Mr. Fashola with a view to interface with the State Government on areas of mutual interest in the drive towards improvement in the Energy Sector and to appreciate efforts made by the state government in the Independent Power Project scheme.

let beaf and his monkeys start calling fashola a flower planter

https://www.youtube.com/watch?v=nTQsWLdwWoM

Flower planter . . . Nigerian English, nothing like it

Fashola must be talking about the IPP created by Tinubu during Tinubu's 1st term. Obj was presido then. That was a contractual arrangement between NEPA then and the Lagos Gov. They are charged a premium to allow Federal Transmission assets to be used for distribution of Power generated by the State Owned IPP. What evidence does Fashola have that the power was not used in Lagos. Lagos consumes 60% of Electricity generated in Nigeria, How does he now know that the electricy generated in Lagos was used in othe states hence the request for the refund.

Anyway it is a contractual issue, let them take it to court if they can not seetle it peacefully.

And the the Issue of having “Greenfield Power Distribution Companies” I thought the FG has given States the power to create distribution companies. Rivers state is already hiding under that provision to create a distribution link between Afam power plant and PHC, so what does Fashola want again.

Flower Planter indeed... we don hear all this English before

Some are pushing Cassava Bread policy, others are pushing for power reform! Goodluck to you!

antitpiah: Flower planter . . . Nigerian English, nothing like it

Who are u and which nation are u from?

That's my Boy Shola! Tinubu would say.

Igbo_hater:

Who are u and which nation are u from?

That is the great Lord, also known as FStranger(1-100), YStranger, StrangerF, Igbaodun, Ojogbontomoye, Papatosibe, Anti-Tpia, Meonbooty, Fagamite, Mitofag, WoeuntoOAM4J, etc.

All hail the great lord.

16 billion naira illegal deduction on power by fg then obasanjo spent 16 billion dollars on power generation during his tenure as president! and yet nothing to show for it. very very interesting!!

I am trying to follow up the facts, The Lagos State IPP I believe can not even power the whole of Lagos State, how can Fashola Say the Electricity was used by other States ? If the Lagos State IPP can power State, then why are we on the National Grid.

Okay, lets say the power generated by Lagos IPP was used by other States, he should be able to fact-find and know which State used the energy then reconcile with that State, its the beauty of privatization.

Its understandable that Lagos State has invested in transformer manufacturing plants, If GreenField Power Distributions COmpany is given a green light, I hope it will not become another Alpha-Beta, another LCC, another "Nations".

The issues of Land and Assets used is understandable, the Federal Government should convert all unused assets to projects that can be used by the Citizens, but handing over to Lagos right now, will be another Ikoyi, where politicians convert Federal Government houses to private use. SO I am sure, fashola and tinubu are waiting to buyer over those plots/assets and convert them to private use, as always.

Nigeria have bad leadership.

Much appreciated

Where is the effect of the power on Lagos. Fashola is the worst governor in this second tenure. Go other parts of Lag and see suffering and level of damged roads and some don't have light for almost a month

[quote author=meksroland]Where is the effect of the power on Lagos. Fashola is the worst governor in this second tenure. Go other parts of Lag and see suffering and level of damged roads and some don't have light for almost a month[/quote.i may not agree that he is the worst gov around now but quite agree that he is not doing enough to improve on his record and legacy.so sorry 4 him cos his oga(tinubu)doesnt want him to build a name/structure.

If the federal government is doing half as much as Governor Fashola,am very sure Nigeria would be a better place.

[size=14pt]Pioneering Role of Lagos in Power Projects[/size]
2 Nov 2010

Being the first state to attempt to break the monopoly of the defunct National Electric Power Authority (NEPA), with the initiation of the Enron Power Project on August 1, 1999, coupled with the recent inauguration of a transformer manufacturing factory, Lagos State has maintained its pioneering role in power projects in Nigeria, Ejiofor Alike, writes

 

Enron Experiment

At the peak of the abysmal performance of the defunct National Electric Power Authority (NEPA), now Power Holding Company of Nigeria(PHCN), Lagos State under the then Governor, Asiwaju Bola Ahmed Tinubu, became the first state to attempt to break the monopoly of the ailing power giant by initiating a giant Independent Power Project(IPP).

On August 1, 1999, the Tinubu-led administration, Yinka Folawiyo Power Limited and Enron Corporation of the United States signed an agreement for an IPP, with the Federal Government as the guarantor.

The barge-mounted electricity generating plant was to be located adjacent to the NEPA’s Egbin Power Station, Nigeria’s biggest power plant.

 

The generating facility was originally designed to consist of nine barge-mounted combustion turbines with a total net output of 290megawatts of electricity.

The total investment in the business was estimated at $225 million with Enron controlling the majority shares, while Yinka Folawiyo Power Limited, a Nigerian conglomerate, owns the remaining shares in the venture.

By the terms of the agreement as presented by Lagos State, Enron was to generate the power and feed it into the National Grid, with NEPA as the operator that was to receive, transmit and distribute the power, while the State would designate destinations for power supply and market it to consumers.

 

The state was also to generate bills and pay the accrued revenue into an escrow account from which Enron could draw; while the Federal Government would provide project support, being the guarantor.

However, in January 2001, the AES Corporation announced that its subsidiary had acquired from Enron, a majority interest in the barge-mounted IPP.

AES, a leading global power company has generation, distribution and transmission infrastructure in Georgia, Hungary, India, Kazakhstan, the Netherlands, Mexico, Pakistan, Panama, Sri Lanka, the United Kingdom, the United States and Venezuela, Argentina, Australia, Bangladesh, Brazil, Canada, Chile, China, Colombia, Dominican Republic and El Salvador,

At the time of acquisition by AES, the barges were still under construction and commencement of commercial operations of the power facility was expected in September 2001.

 

AES was both manager of construction and plant operator; while electricity from the plant was to be supplied to NEPA under a 13.25 year power purchase agreement.

However, since inception, the project was mired in controversy as the state, NEPA and the Federal Government clashed over the implementation of the agreement.

The controversy peaked when Lagos State took the PHCN to the then Dr. Ransom Owan-led board of the Nigerian Electricity Regulatory Commission (NERC), over allegation of breach of supply agreement and wrongful invoicing of the state.

Lagos State had said in the petition to NERC that it had agreed to contribute 21.15 per cent of the Barge Power Purchase Agreement (BPPA) monthly bills on the condition that the power being generated by AES/Enron would be supplied solely to Lagos State.

 

According to the state government, further to the Contribution Agreement, on 14th November, 2000, it instructed the Federal Ministry of Finance to effect a direct debit of its statutory allocations from the Federation Account for the amount due as its contribution, to the capacity payments.

The state however, said that the instruction was to serve only as further security for payment of its obligations, under the BPPA and could only be effected if it failed to pay a valid invoice.

“In June 2001, the IPP began commercial operations and NEPA began to purchase capacity and energy under the BPPA.

‘However, in clear breach of the BPPA and the  spirit of the Contribution Agreement, NEPA failed and or refused to devote any or all of the electrical output of the IPP to customers in the areas designated in the BPPA submitted for its contribution by NEPA,” the state said.

 

Lagos State also stated that despite the breach of agreement, the Federal Ministry of Finance had continued to deduct its 21.15 per cent contribution from source.

All these show that there is no doubt about the viability and feasibility of the IPP project as envisaged by all the partners, including the Lagos State Government.

The project was viable, feasible and was delivered to meet not only specifications but also international standard.

Today, the AES project is supplying close to 230megawatts to the Egbin Thermal Station, from where the power is feed into the National Grid.

 

With this additional supply from AES, the total output from Egbin averages 800megawatts when gas is available.

The only issue under contentionwas that the power generated from AES was being transmitted to the National Grid for the use of the entire country, instead of only Lagos and this bordered on alleged failure by parties to honour contractual and business obligations.

Despite the controversy surrounding the Enron power project, the Federal Government still joined Lagos State to see the wisdom in breaking the monopoly of PHCN, hence the massive construction of power plants across the country and the planned privatisation of the ailing utility giant.

 

Transformer Manufacturing Factory

To maintain its leading role in power projects, Lagos State also became the first state to inaugurate a transformer manufacturing factory built by Elsewedy Electric Nigeria Limited, a subsidiary of Elsewedy Cables of Egypt.

The company, which has a capacity to produce 1,400 transformers yearly, is located at the Badagry end of the Lagos-Badagry Expressway in Lagos.

Speaking during the inauguration of the project, Governor Babatunde Raji Fashola stated that the factory would serve not only Nigeria but other countries in the west coast of Africa.

 

The Governor disclosed that the factory started producing transformers in February 2010, and also added that the transformers produced by the factory were already strengthening the state government’s rural electrification projects in the state.

“The idea behind this factory did not start today. As Chief of Staff in the last administration, I visited Egypt – I led a government delegation to cairo to start the negotiations. But we could not conclude and it was when I became Governor that we signed the Joint Venture agreement that gave us this project,” he said.

“Elsewedy is an African company. When I left Lagos in 2008 to go to Egypt, this was what I went to do with your time and with your money. Electricity does not fail in Cairo.

 

“This is the company that generates and manages the electricity of Cairo. It is an African company. They are not only in Cairo; they are in many parts of the Middle East and many parts of Africa. Let us deploy African solutions to African problems,” he explained.

The Governor, who added that what Lagos State had done was not a rocket science, stressed that in many other parts of the world, transformer manufacturing was a cottage industry, adding that the situation should not be different in Nigeria.

Special Adviser to the Governor on Commerce and Industry, Mrs. Olusola Senapon

Oworu, said the inauguration of the project accentuated the commitment of the state government to the industrial growth and economic prosperity of the state.

 

The Special Adviser noted that the task of bringing the project to fruition was her first major assignment from Governor, having received the mandate to liaise with Elsewedy Cables of Egypt in November 2007.

She disclosed that the project was a joint venture between the Lagos State Government, 5.26 per cent and the Egyptian firm, 94.74 per cent.

According to her, the inauguration of the project was another manifestation of the successful collaboration with the private sector in project implementation.

 

“That we are here to commission this project today is no doubt a testimony to the power of vision, the commitment to mission and a product of dedication and hard work by the state government and the Elsewedy Group. To the good people of Badagry, I congratulate you on this achievement. This, coupled with the ongoing expansion of the Lagos-Badagry Expressway, has positioned this culturally rich and historically relevant town for unprecedented growth in commercial activities,” she said.

 

Appeal to President Jonathan

To encourage his state as well as other states to boost local manufacturing of electricity distribution equipment, Governor Fashola also said he had written to the presidency for a downward review of tariffs on the components of transformers and other distribution facilities.

He said a downward review of the tariffs would strengthen the competitiveness of locally-manufactured transformers in the domestic market.

 

“This is to ensure that these transformers would not be more expensive than imported ones. This is the only way that local firms can grow. If the imported transformers are cheaper, then we will not promote local growth. I want to use this opportunity to appeal to the Federal Government to look favourably and kindly to our requests for a downward review of the tariffs on the imported components of these transformers,” he said.

Governor Fashola said a downward review of these tariffs was one of the ways the Federal Government could use its fiscal policies to promote growth.

The Governor, who also stated that he was waiting anxiously for a positive reply from the Presidency, noted that the measure would reduce unemployment in the country.

 

He said that there was still much work to be done in the area of distribution of electricity in the country.

According to him, the real difficult part of the electricity sector was the distribution end.

“The reality is that as we take steps to improve the stock of power generation in the country, the power that is eventually generated will have to be distributed to houses and consumers through cables, and transformers and measured through electricity metres in order to facilitate fair and proper billing,” he said.

The Governor noted that regular and efficient electricity remains the only missing infrastructure that was militating against the growth of the economy of this country.

He said the actualisation of the potentials of Nigerians and their freedom from poverty were also being hampered by irregular electricity supply.

Governor Fashola also noted that the unveiling of the roadmap on the power sector would provide opportunities for investors in the sector.

 

Conclusion

There is no doubt that the construction of captive power plants to cater for designated areas as envisaged by Lagos State in the Enron project is the panacea to the epileptic power supply in the country.

Heavy dependence on the single ‘almighty’ National Grid for electricity supply to all parts of the country has not only made electricity supply epileptic and abysmally mournful, but has also transmitted system failure in one area to all other areas that rely on the grid.

 

The current effort by President Goodluck Jonathan to break away from the past by encouraging states, local governments and the private sector to participate in electricity generation and distribution is viewed by analysts as a right step in the right direction.

Lagos State has successfully pioneered the involvement of states in power generation and distribution, and it is expected that other states should follow the examples of the State.

The Federal Government should therefore provide the incentives to encourage other states, Local Governments, as well as small and big businesses to generate power for their own use.

 

A downward review or outright removal of tariffs on the components of electricity distribution facilities and power plants, such as transformers and gas turbines is one of the ways that the Federal Government can boost the interest of other stakeholders in power projects.

All regulatory impediments such as the requirement for an operating licence from NERC for generation below 10 megawatts should be removed.

http://www.thisdaylive.com/articles/pioneering-role-of-lagos-in-power-projects/75222/

If fashola is asking for 16 billion, i wonder that what the people that have been paying for the tranformers with their contributions would now ask for.

[size=14pt]Lagos IPP: FG deducts N9bn in four years[/size]

By Kemi Obasola
Monday, 18 Feb 2008


Four months after the Lagos State Government moved to stop the monthly deduction of N225m from its statutory allocation over its Independent Power Plant Project, the Federal Government is yet to halt the deduction.


Investigations by our correspondent showed that so far, another N1bn had been deducted from the funds of the state as at December 2007.


The monthly deduction of N225m from source by the Federal Government since October 2003 is the charge for helping the state carry the power generated by its Independent Power Project to the national grid.


The deduction has continued despite the moves initiated by the state government four months ago to stop the deduction and to probably recover the money that had been deducted so far.


It was gathered that the immediate past administration under Chief Olusegun Obasanjo’s presidency came up with the idea of deduction and deliberately charged the state government the sum of N225m per month as a way of stalling the full implementation of the project.


The independent power plant project was conceived by the immediate past administration of the state under the leadership of Asiwaju Bola Tinubu.


It was expected to provide residents of the state with uninterrupted alternative electricity supply through an arrangement with a power generation company, ENRON, which worked in association with Folawiyo power group.


In September, the state Governor, Mr. Babatunde Fashola, SAN, said his administration had established the right to collect the amount deducted so far from its allocation by the Federal Government. He said it was unfortunate that the state had to pay for electricity being supplied to the country.


”It is unfortunate that Lagos is paying for electricity to the whole country. The story of the Independent Power Plant Project is a long and complicated one. Instead of commendation, we have received condemnation over the years.


”We set a model for the whole country in 2000. Now, IPPs are springing up here and there. As a result of what I consider to be inefficiency, Lagos is being made to bear the brunt for the federation. I think that the attitude must change.


”Whatever may be the case, I think this is one of those instances where the Federal Government must say; look, power generation is our responsibility and whatever cost exists, we will bear it.


“I also think this is something for another forum because our rights to have those deductions refunded have been established by legal advice. But we are still trying to find amicable resolution to it without recourse to litigation.”


A source in the State Ministry of Finance who spoke on condition of anonymity with our correspondent on Monday, said the state government was still trying to recover the deducted money from the Federal Government and to stop further deduction.


According to the source, fresh talks had already commenced with the Federal Government, which would hopefully help to resolve the issue and pave the way for the commencement of the second phase of the project.


According to the source, if the Federal Government could return the deductions collected so far, there would be enough funds for the second phase.


When contacted, the State Commissioner for Finance, Mr. Rotimi Oyekan, said the state government would not only strive to recover the funds but plough such funds back into the provision of adequate power for Lagosians.


Oyekan said, ”We have asked them to stop the deduction and as soon as we are given the money, we will use it for the provision of adequate power supply in the state.


”Lagos needs to have its own power, that is the only solution. It is important that we recover the deducted funds, put an end to the deduction and seek other alternative ways of providing power so that the people can truly enjoy the dividends of democracy. That is our focus and whatever money we recover will be part of the solution.”

http://archive.punchng.com/Articl.aspx?theartic=Art20080218203382

Is that why nepa staffs in lagos have not been paid for 3 months now! I heard lagos state govvernment glt a court injuction to freeze the account of lagos state phcn.... The workers are really feeding from hand to mouth now!!! It makes me sad!

Billyonaire: I am trying to follow up the facts, The Lagos State IPP I believe can not even power the whole of Lagos State, how can Fashola Say the Electricity was used by other States ? If the Lagos State IPP can power State, then why are we on the National Grid.

Okay, lets say the power generated by Lagos IPP was used by other States, he should be able to fact-find and know which State used the energy then reconcile with that State, its the beauty of privatization.

Its understandable that Lagos State has invested in transformer manufacturing plants, If GreenField Power Distributions COmpany is given a green light, I hope it will not become another Alpha-Beta, another LCC, another "Nations".

The issues of Land and Assets used is understandable, the Federal Government should convert all unused assets to projects that can be used by the Citizens, but handing over to Lagos right now, will be another Ikoyi, where politicians convert Federal Government houses to private use. SO I am sure, fashola and tinubu are waiting to buyer over those plots/assets and convert them to private use, as always.

I believe the generated electricity was fed into the National grid...so Fashola is asking for a refund since the power generated is not being used locally

When are we gon hav constant power supply in nigeria

Se na today,go buy candle,é ló ra Abèla.