Senate Tackles Inconsistencies in Power Projects
The Senate, on November 8, took two key motions on the power sector. The chamber after extensively debating the motions mandated its committees including the Public Accounts, Power, Steel Development and Metallurgy as well as Gad development to dig into the perceived anomalies said to be rearing their heads in the Power sector. The senate mandated its committees to examine the Afam Fast power project, said to cost $350 million and a number of other power projects whose completion dates kept shifting like the sea shore.
On Monday November 27, the Committees on Gas Development, Power, Steel Development and Metallurgy held the first of the sets of investigative hearings tagged, “The urgent need to save The 215 Megawatt (MW) Kaduna power plant.”
The hearing was both an eye opener to the sleaze, and misgovernance that has set into the sector in recent years. The lawmakers were told that the plant, originally configured in 2009 as a gas powered plant was moved from its initial location to the current location to ensure it was strategically placed on the trunk line of the 614km Ajaokuta-Abuja-Kaduna-Kano gas pipeline. Senators were however, shocked that after building the plant, some officials of the Ministry of Power changed the Plant’s policy to diesel powered, even though diesel costs 60 percent more than gas.
Lawmakers at the hearing were told that it would cost Nigeria N46 million daily to run one of the eight units of the plant on diesel, whereas it would cost less than half of that to power it by gas. In fact, while it would cost N79 per Kilowatt of power produced from the plant through diesel, it would cost only N37 per kilowatt when powered by gas.
The senators were alarmed that the consultant to the project could agree to the change from gas plant to diesel when the cost overweight was so glaring.
Senate President Bukola Saraki, who was represented by the Deputy Senate Chief Whip, Senator Francis Alimikhena in declaring open the hearing said that the major objective of the hearing is to diagnose issues and challenges threatening the take-off of the Kaduna power plant and also examine why there is a shift from the usage of gas to diesel as source of fuel for the plant.
Saraki said that the Senate is aware that the Federal Government, through the Nigerian National Petroleum Corporation (NNPC), is on the verge of awarding the contract for the construction of the 40x614km Ajaokuta-Abuja-Kaduna-Kano gas pipe line adding that the Senate was convinced that the use of gas to power turbines is sustainable and environmentally friendly.
He said: “It is surprising that the Federal Ministry of Power, Works and Housing appears to have jettisoned the use of gas to power the Kaduna power plant and instead, opted for the construction of Automobile General Oil (diesel) tanks for the use of AGO, which is 60 per cent higher in cost when compared with gas.”
The Senate Committee on Power had in May visited the Power Plant and was assured by the consultants that the Plant would come on stream in November 2017 if some of the seized containers carrying accessories meant for the completion of the project were released at the Onne Port, Port Harcourt.
Officials of the Ministry of Power, who were on hand during the oversight, told the Senate Committee on Power, Steel Development and Metallurgy that vital equipment meant for the completion of the Kaduna Power Plant are rotting away in Onne Port, Rivers State since 2015.
The Power Plant, with initial cost of 156 million Euros (about N54billion) and N3 billion local content was later jerked up to 167 million Euros and N5.8 billion. It was scheduled for completion in 2014 following its relocation from the original location at Kakuri in Kaduna Metropolis to the current location at Kudeda also in Kaduna but has remained bogged down due to repeated tango with port authorities among other issues.
Director of Distribution at the Ministry of Power, Priscilla Sapke, who briefed the Senate Committee during the tour of the power station said that repeated appeals to the Nigerian Ports Authority (NPA) and other agencies in Onne, Rivers State, had fallen on deaf ears as the port had seized 19 containers said to contain accessories critical to the completion of the Kaduna Power Plant.
Sapke said that several containers were initially seized by the port authorities between 2012 and 2014 but that a number of the containers were released to General Electric and Rockson Engineering, contractors to the plant on payment of 50 per cent of an agreed demurrage while 19 others have been lying at the Onne Port since 2015.
Chairman, Senate Committee on Power, Steel Development and Metallurgy, Senator Enyinnaya Abaribe, whose committee conducted an oversight on the troubled 215 MW Kaduna Power Plant in May this year told the story of the rot being experienced in the plant right now.
Abaribe said that the pressing issue of the Kaduna Power Plant would be thoroughly investigated and dealt with by the joint committee.
He said: “This hearing seeks to investigate the anomaly that exist, leading to a stagnating development of the industrial sector, confusion in selection of appropriate alternative option to gas and the need to correct and find out person(s) with personal interest hindering the development of this project as indicated by the Senate President.”
“I am delighted that this presentation is being witnessed by the Committee of Power, Steel Development and Metallurgy and Committee on Gas Resources who are heavily engaged in the task put before them to bring out a coherent and concise resolution. I also acknowledge the presence of critical stakeholders.”
He gave the background to the project thus: “Taking our mind back to the approval of this project in 2009 with an expected completion by 2012, it was unable to see the limelight due to the procurement and implementation defects and lack of budgetary support. The story goes on up till this point, and we are again gathered here to discuss a way forward.
“In accordance to what I raised during the senatorial section of June 2017, our oversight visit to Kaduna power plant, which brought to the knowledge of the construction of two big tanks containing diesel to fuel the power plants. Addressing its cost implication, it was observed that the costs outweighs the benefits derived from the action taken.”
“Consequently, given that the cost of Automotive Gas oil (AGO) is 60% higher than gas usage, it is also not environmentally friendly and not in line with the United Nation Charter on Green Energy and Climate change. Now the awareness of the factors has led to threatened withdrawal of warranty by the General Electric/Rockson Engineering Consortium.”
“Another issue we are faced with is the lack of gas pipelines from the Southern to the Northern part of the Country which on its own has hindered the generation capacity of the Kaduna Power plant.”
“As we are aware, the Federal Government of Nigeria through the Nigerian National Petroleum Corporation (NNPC) is on the verge of awarding contract for construction of 40 inch 614km Ajaokuta-Abuja-Kaduna-Kano gas pipeline project; and as such we should be guided accordingly. This Joint Investigative Hearing. I believe would be able to set the records straight and also chart the way forward for this project that will eventually provide better power supply to the northern states. On this note I would be glad to hear your contributions on this matter.”
Chairman, Senate Committee on Gas Resources, Senator Bassey Albert, who was co-chairman of the hearing, said that the lawmakers were out to get to the roots of the matter, adding that the Senate would not sit by and allow the project become another white elephant project.
Lawmakers at the hearing said they were unimpressed by the reasons given by the Permanent Secretary of the Ministry of Power, Mr. Louis Edozie who defended the change of the parameters of the plant from a gas powered plant to diesel powered plant.
Edozie had told the joint committee that the ministry plans to commission one of the eight units in the plant in January and that the unit would run on diesel. The single unit of that plant meant for commissioning would need 180,000 litres of diesel a day and estimated at N46 million. The lawmakers were however alarmed to hear that the cost would be far cheaper if the plant is to run on gas.
Chairman of GreenVille LNG, Eddy Van Den Broeke, who led his team to address the committee said that the company had a Memorandum of Understanding with the Kaduna Gas Plant to build storage facilities for the plant at no cost.
He also stated that while the plant would produce a kilowatt of electricity at N79 if run on diesel, it will produce the same kilowatt of power at N37.
He said that his company had, as a result of the MOU it signed with the Power Plant invested the sum of $400 million on its Gas plant in Roumuji, Port Harcourt.
He said: “In 2014 when the parametres were signed it was agreed that LNG is most competitive. We have invested $400million after which people in the ministry decided to change the parametres.
“It will cost $200 million more to use AGO (diesel) because there is no other fuel available that can replace LNG and GreenVille. I would want the ministry to give me one cent of response on this change of theory.”
He said that apart from the functional gas plant, Greenville already imported 250 trucks meant to evacuate gas to the power plant before the change of parameters by the ministry.
Senator Bassey Akpan, Co- Chairman of the Joint Committee, told the Permanent Secretary to inform the Minister of Power, Works and Housing that the Senate had put a stop to at the planned commissioning adding, “I feel very disappointed.” Please tell your Minister to stop the process of Commissioning because the project cannot be ready even by mid next year.
“We are insisting that it will be cheaper to run the plant with gas and gas is environmentally friendly. Let your minister know we cannot be taken for granted.”
Senator Bassey also said that the job of the committee was to get a good end of the pie for Nigerians, adding that he was personally disappointed as a Nigerian at the conduct of the power ministry officials who jettisoned a cost effective gas model for the more costly diesel.
He said that the revelations at the hearing were very confounding adding: “If you are working on behalf of Nigerians, do it to the best of your ability because there will be a day when you will be called to account.”
Besides, the Power Ministry had to build storage facility for diesel at the power plant at the cost of N386 million, whereas, the project had entered into a Memorandum of Understanding(MOU) with GreenVille LNG which would have ensured the construction of storage facilities at no cost to the government.
Senator Abaribe in his closing remarks decried the decision of the ministry to change the parameters of the Plant from the cheaper gas to diesel, which is largely imported. He said that the ministry should put the planned commissioning on hold to enable the committee embark on further physical examination of the plant.
He said: “We have heard a lot of disturbing things and we have all seen that we have put the cart before the horse. Everyone in this hall today has now seen why we ask questions. We ask questions when things don’t seem to be going the right way.
“You see one price at N79 and the other at N35, why do you go for the higher cost which is not cost effective. If you are going to spend N46 million daily to run a plant and you said it is temporary, that is not effective. If you start one plant and the rest don’t come up in eight years, we need to save this project from becoming another white elephant project.”
Senate spokesman, Senator Sabi Abdullahi, who was a member of the joint committee said that it was unthinkable that Nigeria would spent N46 million daily to power a unit of the Plant adding, “If it costs N46 million per day, why use diesel?”
He told the Permanent Secretary in the Ministry of Power: “Mr. Permanent Secretary, you are the eyes of our people and you must not give us headaches. You should ensure every service producer gets a fair share of the service.”
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