Babatunde Fashola
The poor power generation and distribution in the country took the
center stage in the Senate on Tuesday, as after over one hour of debate
on ways and means to improve the power sector, the upper chamber
resolved to ask President Muhammadu Buhari to appoint a separate power
minister with no further delay.
According to The Nation, Senate insisted that the appointment of a
separate power minister would ensure concentration in the power sector.
Senator Francis Alimikhena (Edo North) who moved the motion for the
appointment of a separate minister of power, posited that such a
measure would assist the country to shore up the power sector.
The senate resolution followed the adoption of a motion on “The need to establish and delegate Special Purpose Vehicles to execute and operate Major Power Sector Development Projects,” sponsored by Senator Mustapha Bukar (Katsina North)
Senator Bukar in his lead debate said that the National Assembly
enacted the Electric Power Sector Reform (EPSR) Act, 2005 on March 11,
2005, which kick-started the process of privatization of the Nigerian
Electricity Supply Industry (NESI) towards developing a Competitive
Electricity Market with the establishment of the Nigerian Electricity
Regulatory Commission (NERC) to provide for the licensing and regulation
of the entire value chain of the Nigerian Electricity Market (NEM)
He also noted that the privatization exercise became effective on
November 1, 2013 when the unbundled Power Holding Company of Nigeria
(PHCN) was sold and transferred to successful bidders of the 6
Generation Companies (GENCOs) and the 11 Distribution Companies
(DISCOs), while the ownership and control of the Transmission Company of
Nigeria (TCN) was retained by the Federal Government for strategic
reasons.
He said “Further notes that in its quest to bridge the power
gap for sustained economic growth in Nigeria by adding significant new
generation capacity to Nigeria’s electricity supply system, the Federal
Government conceived the National Integrated Power Project (NIPP) in
2004, which metamorphosed into Niger Delta Power Holding Company Limited
(NDPHC) incorporated in 2005.
“Aware that this institution oversees Generation portfolio
consisting of 10 gas-fired power plants with cumulative design capacity
of 4,774 MW; Total Asset value of $8.5 Bn including generation projects
accompanied by supporting transmission, distribution and gas
infrastructure projects and due to gas supply shortage and uncompleted
transmission projects, only about 1,200 MW was accessible to the
national grid at that time.
“Consequently upon the commencement of the privatization and
establishment of the Nigerian Electricity Market, the role of the
Federal Ministry of Power, Works & Housing (FMPW&H) was
restricted to Policy and oversight of the autonomous agencies operating
in the Nigerian Power Sector; these are the:
"Transmission Company of Nigeria; National Power Training
Institute of Nigeria; Nigerian Electricity Liability Management Limited
(NELMCO); Nigerian Electricity Management Services Agency (NEMSA), Rural
Electrification Agency
“Notes that considering the need for continuous development of
the Power Sector infrastructure, the Federal Government remains
committed to developing project initiatives in order to increase
generating capacity and diffuse the energy mix beyond thermal generation
to renewable energy, such as hydro-power, solar power and wind energy.
"Consequently, certain project initiatives were retained for
direct supervision by the Federal Ministry of Power. These included, but
are not limited to:
"3,050 MW Mambilla Hydropower project; 700 MW Zungeru
Hydropower project, 215 MW Kaduna Thermal Power project; 50 MW Katsina
Wind Power project
“Further Notes that annually significant and incremental sums
are appropriated towards these projects and the National Assembly has
been approving such appropriation in the interest of conceived intention
to improved generation capacity to the Nigerian citizens;
“Worried that there are challenges of managing such projects
because the Federal Ministry of Power, as currently constituted, does
not have the required professional competence and resources to
effectively execute these projects, hence they resort to engaging
contractors and consultants for every project development activity;
“Also worried that the implementation of large scale projects
is always fraught with the risk of cost and schedule overrun, with
attendant consequences on overall contract sum;
“Notes that turnkey Engineering, Procurement & Construction
(EPC) projects have FIDIC Conditions of Contract being applicable with
strict provisions for liquidated damages, such as fixed contract sum and
set delivery period. Unfortunately, these conditions of contract cannot
be met under the setting of a ministry;
“Further notes that necessary project management controls
needed for effective delivery are not enforceable on the Federal
Ministry of Power; these are:
Cost Control, Schedule Control, Quality Assurance (Q-plan,
Q-criteria, etc.), Procurement Control (personnel, inspection and
expedition), Design Control (Design compliance and value engineering),
Change Order Control (Management of scope variations); Document Control
(Review & timely approval of designs).
“Worried that with the engagement of multitudes of consultants,
there is a risk of lack of ownership and knowledge transfer upon
completion and commissioning of the projects, which would hamper proper
management of the facilities when in operation. This is the current
situation being experienced at the 215 MW Kaduna Power plant under
construction by the Ministry;
“Aware that Nigeria has had successful record of implementing
several mega infrastructure projects to completion and it is imperative
to draw on such models utilized for refineries, fertilizer plants and
steel mills (Kaduna and Port Harcourt Refineries, National Fertilizer
Company of Nigeria Plc (NAFCON), Delta Steel Company Limited and the 3
Inland Rolling Mills). Each of these Special Purpose Vehicles (SPVs) had
full management team and foundation staff to manage the execution of
the project on site. Upon completion, the Project Managers were
appointed as the Managing Directors, while full-stream staff members
were recruited prior to commissioning the projects;
“Further aware that when the Federal Government was keen to
build Gas based power plants, it created the Niger Delta Power Holding
Company of Nigeria (NDPHC) to build, manage and operate these schemes.
Although some of the power generating plants have been sold, NDPHC has
continued to own and run these plants while the Government is preparing
to sell the remaining plants;
“Worried that with the privatization of the power sector, the
Federal Ministry of Power, Works & Housing is rapidly expanding its
project implementation activities rather than limit its role to
General Policy direction pursuant to Section 33 of the EPSR Act 2005.
This attitude has not given the regulatory body, Nigerian
Electricity Regulatory Commission (NERC) and other agencies created by
the Reform Act the enabling environment to develop their capacity to
regulate and create the electricity market required to attract
investment in the sector. This assertion is evidenced by the fact that
over N100billion has been provided for the construction of power
projects by the ministry under the 2017 budget. Recently, the Federal
government announced the approval of over $5billion for the construction
of the Mambila hydro project under the ministry.”
The Katsina State lawmaker prayed the Senate to accordingly resolve
to urge the Federal Government to immediately incorporate SPVs for the
implementation of the following alternative energy projects:a.
Hydropower Projects; b. Solar Power Projects; and c. Wind Power
Projects;
"Urge the Federal Ministry of Power, Works and Housing to use
gas as the source of Energy for the Kaduna Project in accordance with
the original project concept and the MOU signed with gas suppliers to
complete the project as adequate provision has been made for the
project in the 2017 Budget;
"Urge the Federal Government to employ qualified management
team to take charge of the project development in the SPVs and gradually
resource the companies in readiness for full operations when the
projects are commissioned;
"Urge the Federal Government to transfer all generation,
transmission and rural electrification projects to the respective
agencies for proper administration;
"Urge the above-named SPV’s when created to comply with the
provisions of the Electric Power Sector Reform (EPSR) Act by applying to
NERC for the generation licenses and to the TCN for Grid
inter-connection approval."
All the prayers were adopted.
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