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$16b power controversy: EFCC invites two ex-governors, three former ministers, bank chief, ex-aviation chief for questioning

By Yusuf Alli on 25/08/2019

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With the official backing of President Muhammadu Buhari, the Economic and Financial Crimes Commission (EFCC) is set to grill suspects linked with the $16 billion failed power projects.

Twenty suspects, among them, two ex-governors, three former ministers, a former chairman of a bank and an ex-aviation chief, will be invited by the anti-graft body to say all that they know about the projects. Also to be grilled are 17 companies linked to the projects.

The projects were executed during the administrations of ex-President Olusegun Obasanjo, the late President Umaru Yar’Adua, ex-President Goodluck Jonathan and the first term of President Buhari.

But those in charge of the projects said $8.58 billion was actually allocated between 2005 and 2018.

The breakdown is as follows: $2.2billion from 2005- 2007; $600million in 2008; about $5.37b from 2010/2011 to date; $150m-$200m made available to NNPC by CBN; and about $80million for Ibom Plant.

The EFCC however insisted on following the cash to know if the NIPP projects were overpriced and whether or not there was either embezzlement or diversion of the cash meant for power projects.

A special team has been raised by the EFCC and all documents from relevant Ministries, Departments and Agencies (MDAs) have been obtained.

“The EFCC has received the backing of President Muhammadu Buhari to probe the power projects by following the cash to ascertain alleged overpricing of the projects; payments for job not done and whether or not there was embezzlement of funds or diversion to private accounts, “an EFCC source said yesterday.

“We will take about 20 key people who were involved in the execution of some of these projects. We have also shortlisted about 17 companies for investigation.

“There are two former governors from the South-South, a former chairman of a bank and a former chairman of an airline whose companies have been implicated.

“After hearing from those short-listed, the Special Team of the EFCC will also have the opportunity to visit the sites of some of these projects to ascertain the completion or otherwise of some of these projects,” he said.

He said the investigation is not targeted at any individual but “to uncover alleged underhand deals which dotted the projects and to verify if the projects awarded were executed or not.”

“Where there are allegations of mismanagement or diversion of funds, we will fish out those behind it. We will start inviting some of the key players in the next few days and weeks,” he added.

The anti-graft official said a report of the House of Representatives Ad hoc Committee on Power Probe, headed by the current Minority Leader, Hon. Ndudi Elumelu, explained in details cash withdrawal from the Excess Crude Account (ECA).

“Go and read the report, you will see that beyond the surface dressing or claims by some officials in charge of these projects, there were some alleged shady aspects.

“We will be as open-minded as possible and allow all those concerned to clear the air as much as possible,” he said

The Elumelu report said in part: “From the oral and documentary evidence, it was clearly established that the total expenditure in the power sector during the period 1999-2007 was US$13, 278,937,409.94 billion.

“Indeed, had the supplementary budget of the power sector in 2007 been implemented, the expenditure could then have been over $16 billion reported by the Speaker of the House of Representatives.

“There are also unfunded commitments to the tune of US$7.265 billion for NIPP projects as at May 29, 2007.

“There is another US $1 billion for PHCN capital projects awarded between 2000 and 2007, which have been captured in the 2008 Appropriation Act.

“Additionally, the total commitment of the NNPC and its Joint Venture partners (of which the Federal Government, through the NNPC has an average of 51% interest) towards  IPP power plants, gas sources development, gas transmission and metering of JV IPPs, PHCN power plants and NIPP power plants, according to the submission of the acting GMD of the NNPC is US$7 billion, out of which about US$1.62 billion has been expensed, leaving outstanding commitments of over US$5.5 billion out of which the Federal Government will provide about US$3 billion.

“Recognition of these unfunded commitments would bring the total (funded and unfunded) FGN expenditure commitments in the power sector to over US$24.5 billion between 1999 and 2007.

“From the assessment done during the Committee’s tour of the project sites, it is safe to conclude that no meaningful progress was made in the execution of power contracts.

“It is curious and quite strange that officials rush to pay contractors in full even before engineering design for the projects have been completed and approved.

“NIPP contracts were not only overpriced in comparison with PHCN contracts, they are also wide off the mark when viewed against comparable power stations in several parts of the world.

“A comparable review of the cost of power installations in varied regions of the world such as South Korea, Saudi Arabia, U.S.A, Taiwan, Hong Kong, Mexico and Chile showed that $10billion could have built plants to produce between 5,000 to 6,000 MW of electricity. But this amount failed to do so in Nigeria.

“Unfortunately, all NIPP payments were made without following Due Process. In its place, a process called ‘Waiver of Due Process Certification for Payment’ was adopted in flagrant disregard of Due Process Policy, thus paving the way for dubious and highly risky payments to contractors and consultants by the Federal Government of Nigeria.

“The committee found hard and widespread evidence of systematic over scoping of projects in order to inflate costs both in PHCN and NIPP.

“At least 15 transmission lines and substation projects have been identified. For example, the New Haven-Ikot-Ekpene 2x330kv Double Circuit Line was over-scoped by 49% whilst the Afam-Ikot Ekpene 330kv line was over-scoped by more than 100%.

“The estimated aggregate cost inflation identified so far for transmission projects is over N20billion and this is recoverable from contractors.

“A clear example of project cost inflation is the proposed supply of 9No GE frame 9 gas turbines and auxiliaries at the cost of N185 billion($1.55 billion) awarded to Rockson International.

“In comparison, it is noteworthy that GE supplied 18No turbines of similar specification previously at about $404million, including cost of Technical Assistance (TA) services and Long-Term Service agreements (LTSA). The implicit cost inflation on the nine additional turbines and associated services exceeds $1.145 billion.

“Another example is the costing of the so-called change-order provisions for Alaoji Power Plant (Phase I) at a highly-questionable amount of US$123 million.

“NIPP Distribution EPC contracts were awarded at costs averaging about 10 times the norm when compared to PHCN contracts costs for similar projects in the past five years. This 1,000% cost inflation of the NIPP Distribution EPC work scopes translates to an aggregate overpricing of over N50 billion.”

Somebody who was involved in the project but does not want his name in print, said: “We only hope EFCC will be fair to appreciate the fact that those who implemented these projects were patriotic.

“The first premise the EFCC must focus on is the fact that no $1 billion was released by the Federal Government.

“Between 2005 and 2018, the projects gulped about $8.58 billion including $2.2 billion from 2005- 2007; $600 million in 2008; about $5.37b released from 2010/2011 to date; $150m-$200m made available to NNPC by CBN; and about $80 million for Ibom Plant.

“In 2007, a former Accountant-General of the Federation said $2.2 billion was released for the NIPP projects.

“The $8.58 billion was allocated as follows:

*About $4.4 billion — Power Plants (5,000MW) at less than $1m per Megawatt

*About $2 billion for Transmission Lines

*About $1.5 billion for 350 distribution projects

*$600 million - $700 million for gas pipelines

*$80million loan from the Excess Crude Account (ECA) for Ibom Power Plant which resulted in an interest-free debenture

“The EFCC’s probe is a welcome development because it will afford Nigerians to know the truth about the power projects. Some of the projects being commissioned by the Buhari administration are parts of the projects.

“As a journalist, you can do a Google Search, you will realize that some of these projects have been completed and commissioned because government is a continuum,” he said.

•Excerpted from a report by The Nation on Sunday.

Source News Express

Posted 25/08/2019 11:04:33 AM





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