VICE Chairman of the Senate Committee on Power, Steel Development and Metallurgy, Senator Mustapha Bukar (APC Katsina North) moved a well-accepted motion on the floor of the Senate on September 17. It was all about the need to separate the ministry created by
President Muhammadu Buhari in November 2015. Two years into the experiment, the Senator believed that it was not bringing the desired dividends and would seek the support of his colleagues to press for a reversal.
The senator, one of the insiders in the ruling All Progressives Congress (APC) did not need to labour hard before securing the buy in of his colleagues who agreed completely with the scenario he painted about the darkness that appears to be worsening in the land.
He insisted on the need for direct management of the power sector by a minister who would have that sole responsibility, contrary to what operates right now where the former Governor of Lagos state, Mr. Babatunde Raji Fashola (SAN) is the Minister of Power, Works and Housing.
Senator Bukar, who moved a motion titled, “The need to establish and delegate special purpose vehicles to execute and operate major power sector development projects,” said that the power sector should not be exposed to a situation of jack of all trades and master of none.
In a debate that lasted a little over an hour, the senate resolved that the executive needed to devise ways to improve the near moribund power sector, while asking President Muhammadu Buhari to appoint a separate minister of power without delay.
According to the lawmakers, the appointment of a substantive Minister of Power would ensure that the appointee concentrates on the power sector. Senator Francis Alimikhena, Senate’s Deputy Majority Whip, (APC Edo North), moved an additional prayer for the appointment of a separate Minister of Power. His additional prayer was seconded by the Deputy Minority Whip, Senator Biodun Olujinmi, who stated that such a development would help the country realise its dreams in the power sector.
While leading the debate on the motion, Senator Bukar submitted that the National Assembly enacted the Electric Power Sector Reform (EPSR) Act, 2005 on March 11, 2005, thus kick starting the privatisation process in the sector. He said that the passage of the act also heralded the privatisation of the Nigerian Electricity Supply Industry (NESI) and the development of a competitive electricity market leading to the establishment of the Nigerian Electricity Regulatory Commission (NERC), which has been providing for the licensing and regulation of the Nigerian Electricity Market (NEM).
The senator also noted that the privatisation exercise in the sector became effective on November 1, 2013, following the unbundling of the Power Holding Company of Nigeria (PHCN) and the transfer of its assets to successful bidders for the six Generation Companies (GENCOs) and 11 distribution companies (DISCOs). The Federal Government only retained the ownership and control of the Transmission Company of Nigeria (TCN), a step said to have been taken for strategic reasons.
The Senator submitted that the senate: “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 billion, 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 privatisation and establishment of the Nigerian Electricity Market, the role of the Federal Ministry of Power, Works and 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 and 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 and 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 utilised 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 three 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 gederal 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 privatisation of the power sector, the Federal Ministry of Power, Works and 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 N100 billion 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 Senator asked his colleagues to accordingly resolve that the Federal Government should immediately incorporate SPVs for the implementation of the following alternative energy projects; Hydropower projects; solar power projects and wind power projects.
He equally asked the senate to 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.
He also listed in his prayers that the senate should resolve to 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.
Another prayer contained in the motion is the call on the senate to ask the federal government to transfer all generation, transmission and rural electrification projects to the respective agencies for proper administration. He also urged his colleagues to direct the 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 approvals. The motion was widely supported by Senators who adopted all the prayers as moved by Senator Bukar.
Insiders in the Senate told the Nigerian Tribune that the motion was necessitated by the experience shared among members of the Senate and House Committees on Power, Works and Housing in recent months. For instance, it was gathered that the Power Works and Housing ministry is responsible to at least six committees in the two chambers.
It was learnt that invitation letters meant for the Minister to attend hearings often get muddled up in bureaucratic bottlenecks of the different ministries as the minister shuttles the three within the week.
“Because of the creation of the mega ministry, the Minister has to allocate days to attend to files or appear physically in each of the ministries. And that being the situation, he often gets invitation to attend hearings late.
“If you drop the invitation at the Ministry of Power, he might not get it until a day to the event and most times he would be unaware of the event because he can only allot days to visit the ministries. That is one of the reasons he could not attend the maiden edition of the power safety summit held in Uyo, last week,” a source in the legislature said.
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