Energy Briefs
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THE Senate Committee on Power, Steel Development and Metallurgy, has accused Chinedu Nebo, minister of power, of stalling the review of the $24 million Manitoba power contract. The $24 million controversial management contract was signed between the federal government and a Canadian firm, Manitoba, to run the Electricity Transmission Company of Nigeria, one of the firms that succeeded the unbundled Power Holding Company of Nigeria, for three years.
Philip Aduda, chairman of the committee, said the minister had failed to forward the contract papers signed with the power firm to his committee for necessary scrutiny. He, however, directed, Don Priestman, chief executive officer, Manitoba, to provide a comprehensive list of Nigerian counterparts to the committee on Wednesday, December 4. “We (the Senate) need to know how you signed the agreement and what you signed,” he said.
Aduda also faulted the alleged non-deployment of N16bn approved for the Rural Electrification Agency to undertake electrification projects across rural communities in Nigeria, in line with the provisions of the Electric Sector Reforms Act (EPSR 2005). The senator threatened to begin calls for the sacking of Kenneth Achugbu, managing director, Rural Electrification Agency, REA, over non-implementation of the rural electrification projects, with a history of an alleged N5.2bn scam leading to its initial closure in 2009.
Usman Abatemi, a member of the committee, said the power minister could not blame the alleged faulty transaction on the Bureau of Public Enterprises, because “it is a public document and you are the custodian of the agreement.” On his part, Chris Ngige noted that the $24 million Manitoba deal was aimed at improving the electricity transmission system but lamented that it had not achieved its set goals.
The power minister told the Senate panel that a little over N6bn of the approved N16bn had so far been released to the REA, with the balance expected to be released before the end of this month. He said the government’s sale of the power plants was transparent. “We have encountered some teething problems along the way and those problems are not unexpected,” Nebo said.
N50 Billion Buffer Account for GENCOS
THE federal government has endowed N50 billion in escrow accounts of three Nigerian banks to support the efforts of power generation companies. Benjamin Dikki, director-general, Bureau of Public Enterprises, who signed the agreement with the three banks in Abuja, said the money would be a buffer for losses that the generating companies could suffer in the process of power transmission.
The N50 billion was part of the proceeds from the sale of 14 successor companies carved out of the Power Holding Company of Nigeria, PHCN. Dikki said the accounts would be managed by the Electricity Bulk Trader while the generation companies must meet certain conditions before they could withdraw from the accounts. He explained that the fund was not an endowment to the GENCOS but an incentive to the power plants’ owners to invest in expanding the capacity generation of the nation.
“This N50bn is not a dash. There are certain conditions that must be met before funds can be drawn from these escrow accounts. The market and systems operator must confirm the quantum of power put on the national grid. The market operator has to confirm that because of system defects and inefficiencies in the transmission network, certain amount of power was lost. So, there has to be a due process before any GENCO can draw from this amount. It is not a gift because certain conditions have to be met. It is actually the generation companies that are left on the high end and we need to guarantee that whatever power they generate will be paid for; if not, they will lose their capital and not be able to invest in expansion of their capacities,” he said.
According to him, the country needed about 29,000 megawatts of power to stabilise its power needs which he put at 40,000MW. At an average cost of $1.3m for installing a megawatt of power, he said an investment of $7.5bn was required for 5,000MW. “We need to make sure that we create the atmosphere that will enable these generation companies to make investments in power generation without looking back or worrying whether they will be able to recoup the monies they have invested. That is why this escrow account was created. The essence is to induce efficiency in the market. If somebody is penalised for losing power in the system, that person will sit up and ensure that he does not lose power and money. Whatever that is already drawn from the escrow account cannot be clawed back, it is the insurance that the Federal Government is giving to ensure that we have stable power. Something must come at a cost. At this initial stage of the development of a private sector-driven power market, there has to be some guarantees that will enable investors to see a clear horizon of their investments.”
While the First City Monument Bank Plc would serve as the lead escrow agent, United Bank for Africa and First Bank of Nigeria Limited are the other banks participating in the process for the release of the funds deposited in their escrow accounts. The BPE boss said the three banks would serve as the custodians of the money while the relevant government agencies would establish the process for drawing down on the money.
NGO Wants Quick Oils Spill Clean-up
THE Environmental Rights Action/Friends of the Earth Nigeria, ERA/FoEN, a non-governmental organisation, NGO, has called for prompt clean-up of the Atlantic coastline in Bayelsa State impacted by oil spill from Brass oil export terminal. It was reported that an oil spill from Brass crude export terminal operated by Agip, discharged a yet-to-be ascertained volume of crude into the Atlantic Ocean on November 28.
ERA/FoEN, an environmental rights group, made the call in its field report on the spill incident. According to the report signed by Alagoa Morris, head of operations, ERA/FoEN, ongoing efforts to contain the spill are commendable. The NGO said that on receiving reports of the spill, it dispatched its field monitors to evaluate the situation.
“ERA/FoEN mobilised to visit the Odioama community environment on Sunday, December 1, 2013. It was in the normal tradition of investigating and monitoring the environment with a view to making independent observation and speaking directly with the victims. The chairman of Odioama Kingdom Council of chiefs conducted field monitors of ERA/FoEN around some sites and fishing camps. Signs of crude oil were noted,” the report stated.
ERA/FoEN further stated that preliminary investigations by its field monitors showed that the spill might have been caused by operational failure. It further noted that the possibility of sabotage from the fortified export terminal was remote. It demanded transparency and international best practices, including the convening of a Joint Investigative Visit, JIV, by all relevant stakeholders to the impacted communities.
“Agip should not only send relief materials to impacted communities and satellite fishing settlements, but pay adequate compensation for general and specific damages. The media and other human and environmental groups, local and international, should show interest in this matter and act accordingly, in the interest of the victims and humanity,” the report said.
Compiled by Anayo Ezugwu
— Dec. 16, 2013 @ 01:00 GMT
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