Senate summons Fashola over alleged N106bn contract scam

The Senate on Wednesday accused the Ministry of Power, Works and Housing of an attempt to divert the sum of N106.7billion ($350 million) meant for the Nigerian Sovereign Investment Authority (NSIA), to execute a power project, which the National Assembly never endorsed and appropriated.

Against this background, the Senate directed its Committees on Power and Public Accounts to summon the Minister of Power, Works and Housing, Mr Babatunde Fashola to appear before it to give detailed account on reason for alleged diversion of the sum.

The $350 million in question is part of the $1 billion raised through Eurobond by the Federal Government in July 2013 and released to the Nigeria Electricity Bulk Trading Company( NBET) Plc as shareholder contribution to shore up its capitalization.

The Senate summoned Fashola on the alleged diversion of the money in question following its adoption of a motion moved by Senator Dino Melaye (APC, Kogi West), titled “Monumental Fraud in the Power Sector”
Melaye said from the sum of $350 million, the Ministry of Works, power and Housing had already spent the sum of $35million on the Fast Power Projects (Afam Fast Power) without evidence of feasibility study indicating the viability of the projects, and requisite appropriation by the National Assembly as required by the Constitution.
He said the Ministry took the action on the guise of obtaining presidential approval for the projects, insisting that the action was unconstitutional.
Against this background, the Senate also mandated its Committees on Power; Public Accounts; to investigate and consider summoning the Nigerian Sovereign Investment Authority (NSIA); Nigerian Electricity Bulk Trading Company ( NBET) etc, to establish the status of the $350million and to report to it within two (2) weeks.

Melaye said it was alarming that since the introduction of the Fast Power Project by the Federal Ministry of Power, Works and Housing, a total sum of $35 million has been spent by the Ministry on Afam Power Project alone to pay $29 million to General Electric (GE) as cost for turbines and $6million in consultancy fees to other entities respectively, all without requisite feasibility study of the projects and appropriation by the National Assembly as required by the Constitution
He explained that NBET is a Federal Government owned public liability company which deals in electricity trading and management of associated liabilities; adding that the sum of $350million released to it was to demonstrate NBET’s preparedness to assume its role as a government backed electricity bulk trader to provide market confidence in the privatized electricity market;

He said the Federal Government had intended to backstop NBET’S with new investors in the electricity market especially new generation companies and to provide assurance to them that NBET is a credit worthy off-taker of power with the requisite capitalization to meet its payment obligations to both greenfield and brownfields power generating companies;

He noted also that the $350million was domiciled with the Nigerian Sovereign Investment Authority (NSIA) for reinvestment in low risk investment and structured in a manner that NBET can call for funds at short notice when required.

According to Melaye, the fund has been with NSlA since 2014 and has helped build market confidence especially among new investors in the electricity market, stressing that the Ministry’s decision to mop up the fund was illegal.

Melaye said the Ministry of Works, Power and Housing needs to provide answers to many questions on the $29 million paid to General Electric and the $6 million paid to other consultants .

The questions, according to him include, “Who were the Consultants and how were they procured, Was there observance of due process in awarding the consultancy of $6 million and in paying General Electric $29 million for turbines, Why is the transaction cloaked in secrecy and What is the true value of Afam Fast Power?

He said the Senate was also interested in knowing “Why the Ministry was engaging in constructing new power plant while government has several idle plants that is seeking buyers for and why is the Ministry that is supposed to be making policies, dabbling into constructing new power plants that we have all agreed is better handled by the private sector?