Govts’ N3trn NIPP investment to improve electricity – Olotu

The immediate past Managing Director of the Niger Delta Power Holding Company (NDPHC), Mr. James Abiodun Olotu who is also Chairman of Innovest Nigeria Solutions Limited (INSL) was the handlers of the 10 power plants and other value chain projects worth $8.4 billion (About N3.032trn) under the National Integrated Power Projects (NIPP).

He stated how the three tiers of government intervened in improving electricity supply, adding that there is anything anybody can do in life without reference to God, and with God all things are possible.

Olotu stated that the NIPP was a baby of the three tiers of government with President Olusegun Obasanjo as the lead. NIPP was a bunch of experts that became a ‘taskforce’, but when I got in, the idea of turning it into a company came.

We were registered as a company and we took inventory of what had happened before I came in.
Then the National Assembly’s Committee on the Fiscal Revenue Mobilisation Commission according to him raised issues about the way NIPP was formed and they were using the Excess Crude Account (ECA) to fund it.

Then his team met with the leadership on it to mobilise the state and local governments to join the Federal Government in the project as their money was involved, and it was done. From these, everybody came on board and they now decided to give more money.

Speaking further, he said, originally, NIPP had six power plants and about 30 transmission projects before it was expanded. But it was realised that if they build these plants, power will not get to houses if building distribution and gas infrastructures was not done.

This he said led to the expanding the value chain, and which involved all the sector’s players.
Before the project stalled, Olotu stated that NIPP had already spent $2.8bn and those who were trying to stop it did not understand. The contracts that were signed at that time were more than $6bn, but the project had already gulped $2.8bn.

“If you stall the project at that time, it meant the $2.8bn spent as collateralised advanced payment guarantee, international and performance bonds would be lost and those contractors could go to court and whatever was their perceived expectation of profit, if the projects were finally completed, we would pay them.

“So , we decided that we should also challenge that area. We met with a lot of people and educated them until we finally convinced them”, he said.

Before he left office he said, the entire investment of NDPHC was $8.4bn (N3.032trn) on the NIPP. The investments in generation was $4.4bn, transmission network was about $2bn, distribution infrastructure was about $1.5bn, investments in gas was about $750m. The rest was for administration, taking care of compensation, salaries and rents.

“We have 10 power plants in various locations and of different sizes; the transmission and distribution lines were over 10,000km with substations that have over 5,000MVA capacity when completed. By the time we were leaving, the projects were like 85 percent completed. Six power plants were completed and delivering power to the grid. One was half completed”, he spoke further.

The immediate past Managing Director of NDPHC, pointed out that Alaoji Hybrid Plant’s first phase was commissioned and operating. The transmission projects were about 90 percent completed. “We added more distribution projects from 165 to 350 and they were 85 percent completed; the generation projects were 80 percent completed: six and a half were completed while the others were in the range of 70 to 80 percent completed. That is what the new management is working hard to do”.

He said that NIPP was a task force that was a combination of experts from different agencies relevant to achieving the projects.

To identify the projects, he said, the technical committee had people from gas, transmission and generation sections and if they didn’t say yes to a project’s location, it would not be taken. “We had 53 sites and the committee chose seven sites for the generation assets for the first seven projects.

“It is, therefore, not true that NIPP went ahead and located plants without consulting the people from gas. It didn’t happen that way as we were all together”, he stated.

“However, there are other equations that must balance to have power. If there is gas in place, we need land around there and transmission infrastructures”.

“We took the 10 power plants to the open market to privatise them because we wanted the private sector to run them. NDPHC operates as private, although the shareholding is by the government, but we wanted to hand over the plants completely to the private sector for efficiency and effectiveness.

“We want the private sector to provide the money that we used for the plants’ construction and use this money for the second phase of NIPP which was already approved during the last regime. It involves Mambilla, Gurara and several other hydropower plants, about 15 of them”.

After the transaction, according to him they were able to rake in $5.7bn for 80 percent shares in those 10 power plants; finished and unfinished.

“For the unfinished ones, we agreed that we will finish them before we collect the money from the bidders, they can give us some assurance by paying certain percentage so that when we finish we hand over to them. We spent $4.4bn for that and we got $5.7bn bid price for 80 percent of it”.

After the bidding, he said, they told the bidders to do the second round of due diligence and they had complaints of transmission, gas and distribution.

“We solved some of the technical problems, but even those who bided then found that they don’t have enough money because they now have to buy the dollar at higher rates. So, both the foreign exchange issues, security problems, and technical issues affected it.

“We have to run the plants. I think what the new management is doing now is to run them as best as they can in order to make much money as they can to make the company to continue to run.”