In May 2008, former President Olusegun Obasanjo was summoned by the
house committee probing the expenditure on power sector between 1999 and 2007
when he was in office. His successor, Umaru Musa Yar’Adua, had alleged that
Obasanjo’s administration spent $11 billion on the sector “with nothing to show
for it”. This prompted the probe, with the alleged figure rising to $16
billion. Below is the full response of Obasanjo to the allegation in a letter
dated May 12, 2008 which he sent to the house committee on power and steel.
The Chairman and Honourable
Members of the House of Representatives Committee on Power and Steel, I thank
you for your letter of the 3rd of May 2008 received on the 9th of May 2008 inviting
me to appear before you. In the said
letter, you said that the invitation was to give me “a fair hearing on
allegations and counter-allegations which were made behind me in respect of my
role in the execution of projects in the power sector from 1999 to 2007″.
Your letter which came to me on
the 9th of May 2008 inviting me to appear on the 12th of May 2008 (the 10th and
11th being Saturday and Sunday respectively) did not specify or include details
of the particular allegations and counter-allegations made before you by some
persons who appeared before you to which you want me to reply or respond.
As much as I would like to assist
your investigation, fair hearing which you referred to demands that these
particulars ought to be forwarded to me and adequate time ought to be provided
for me to prepare before appearing before you.
The need for adequate time becomes more imperative since I have left the
government since 2007 and I have no access to government data and information
which are in the custody of the government.
It is my view that your task is
not an easy one and nothing should be taken for granted. Since you have taken it upon yourselves to
strengthen our practice of democracy which was re-established in 1999, and for
which I was a key participant and nourisher between 1999 and 2007. As a democrat, I will like to do whatever is
possible within the Constitution, the law and decency to help as you establish
a new precedent of investigation and putting searchlight on the executive
actions and duties after office. It is a precedent that may serve the country
well or serve the country not so well.
It is seen by me as healthy for our young democracy if it is carefully,
fairly, justly and honestly carried out.
I will hope that my response to your invitation will not be taken as
precedent for other former Presidents to be so invited in future. It may be regarded as being in bad taste and
that may be right. I chose to be here
not because I see it as compulsory or mandatory. It is absolutely voluntary.
In general sense, democracy is a
system of government in which the ultimate power rests with the people. In institutional sense, it is a system in
which powers are divided or shared among institutions: Executive, Legislative
and Judiciary. With the concept of
democracy and good governance, we have a system based on good leadership,
respect for the rule of law and due process, accountability and
transparency. Your task must be to
enhance these pillars of democracy and good governance and I am here just to
assist you in doing that as a means of continued nurturing of our young
democracy. Having said this, no
institution of government should use its power to prevent or hinder the other
institutions of government from being able to function properly, effectively
and appropriately. I appreciate Section
88 of our Constitution which says that the National Assembly has powers to
investigate any matter in which it can make laws for the purposes of making
law, and that power and energy is part of such laws.
However, in Section 148, the
President has power to grant executive responsibilities to ministers, to hold
regular meetings with ministers for determining the general direction of
domestic and foreign policies and to coordinate the activities of ministers in
the discharge of their executive responsibilities. The President leads a team
and galvanises, mobilises and inspires that team into action. What I am saying
here is that the privilege and the collective responsibility of the members of
Executive Council must not be hindered by the way the National Assembly carries
out its function, otherwise it may be difficult, if not impossible, for the
Executive to carry out its domestic and, certainly, its foreign duties,
policies and responsibilities.
COLLECTIVE RESPONSIBILITY
Each institution should carry out
its functions in such a way to enhance its own performance and the performance
of other institutions of Government.
Going on from this point, I could say that having granted executive
responsibilities to the minister responsible for power and, believing in the
concept of collective responsibility of the Executive Council, I do not need to
appear before your Committee since the Ministers responsible for Power and
Finance have appeared on their own separate behalf and on behalf of the
Executive Council. I have chosen not to
go that way because I, personally, believe that we must all carefully, justly,
fairly, sincerely and honestly continue to nurture and strengthen democracy, if
the exercise you have embarked upon is not working to a pre-conceived answer.
May I draw your attention to the
letter of 3rd of May received on the 9th of May headed “Invitation to Appear at
the Public Hearing on the Power Sector”.
I observed that the letter was not authored or signed by the Chairman of
the Committee, Hon. Ndudi Godwin Elumelu.
The signature is that of one Sahmed.
As a matter of comment, I believe that courtesy and decency will suggest
that a letter from any Chamber of the National Assembly to me as former President
of this country, on a matter of this nature, will be signed by the head of the
chamber concerned on behalf of the Committee or the Clerk of the National
Assembly or, at the minimum, the Chairman of the Committee itself and not by a
third party.
For the reason of the way and
manner your invitation came as well, I may choose not to appear and merely
object to the manner of invitation.
Again, I have chosen not to go that way.
As Africans, we must respect age and authority. It is also a product of birth
and breeding in an African culture. I
hope members of the Committee will have something to learn from this exercise.
Be that as it may, let me go to the points that will “give an insight and
perspective into what” I know and my role in the execution of projects from
1999 to 2007.
What was the position of Power in
May 1999 when our Administration took over?
The following is the summary:
1. Non-serious investment in
generation and transmission between 1981 and 1999, a period of eighteen years,
except the completion of Jebba and Shiroro hydro power plants which my military
administration began and Egbin thermal plant initiated also by military
administration all of which were completed by President Shehu Shagari
administration. And yet, for a developing country like Nigeria, we should be
increasing the rate of our power generation as close to the rate of our
population increase as possible. Our Administration thereby inherited eighteen
years of non-investment in power generation and seeming apparent neglect of the
sector. Serious determination to
understand where we are and how we are in the power situation today must
understand this background.
2. Although 6000 MW capacity was
claimed in 1999, only 1500MW was being generated. Ijora and Oji River thermal
based on coal have completely closed down for lack of coal production and early
gas thermal units at Afam and Delta were obsolete and needed replacement.
3. The hydro power plants of
Kanji, Jebba and Shiroro suffered seriously from silting and/or inadequate flow
of water into the dam and poor maintenance.
4. The Egbin thermal unit
suffered from disruption of gas supply through vandalism and poor management
and maintenance by NEPA staff.
5. Because the transmission
system was not a closed loop, any disruption by vandalism or any other cause
meant power would totally be cut off from the part of the country affected.
6. NEPA was a den of monumental
corruption and malpractice which were deep and widespread and revenue
generation was grossly below expectation. There was massive illegal connection
and avoidance of payment of bills.
CLOAKED IN MYSTERY
This situation was not thoroughly
understood, identified and clarified until after the first two years of my
first term. Late Chief Bola Ige, who was
my first Minister in charge of power and who, by any standard, was a bright and
smart person, thought he could deal with the problem of power within six months
and he made such public pronouncement to the world. But after twelve months, he could not
unravel, in details, the problems of NEPA let alone proffer a satisfactory
solution. It was not because he did not
try, but rather it was because NEPA was cloaked in near mystery.
After late Bola Ige was moved to
Ministry of Justice, Dr. Segun Agagu took over and, with him, I paid a little
more direct attention to the power issue.
I was surprised, after one year, to discover the situation described
above.
With such discovery, we sprang
into action. First, NEPA leadership had to be changed and we brought in an accomplished
Engineer from the private sector in person of Engr. Joe Makoju to assist with
giving the organisation the leadership it lacked and to shape up the entire
structure of organisation and change their attitude and orientation. The aim was to sanitise and reposition NEPA
to perform its roles, functions and duties to the nation. Then, we started to tackle the issue of
repairs, maintenance and replacement.
In replacement, we started with
Afam where a new 276MW thermal unit was installed and commissioned.
We requested the Oil Companies to
join in providing power to sell to NEPA. Mobil Oil started talking to us
locally but due to lack of interest from their Headquarters in the US, they
gave up. In spite of all efforts in this
direction, only Agip Oil showed enough concern and commitment to build a 480MW
thermal unit with transmission line to the grid system which I commissioned at
Okpai. Until I left government in May
2007 and, in spite of pressure on the Oil Companies, no other Oil Company made
commitment in this regard to the point of commissioning. It must also be mentioned that the delay in
getting the Energy Regulatory Bill passed by the National Assembly also
contributed, in some way, to the private sector slow commitment to power
generation. In spite of power being on
the concurrent list in our Constitution, only Rivers State paid serious and
appreciable attention to power generation and transmission, Akwa-Ibom followed
later with Federal Government support.
POOR REVENUE
Meanwhile, we embarked on
building thermal units in four locations where existing gas pipelines are
sufficiently close to minimise cost of gas provision to these sites. These sites or locations are Papalanto,
Omotosho, Alaoji and Geregu. Each of
these sites could be made to ultimately provide close to 1000MW. It must be remembered that the first term of
our Administration started with the price of oil at $8 to $9 per barrel. Our budgets were not realised due to poor
revenue intake from oil. For these four
locations, we had to seek loan from China at concessionary rate to support two
of the sites. Three of these sites –
Gerengu, Omotosho and Papalanto – were built to the point of commission before
I left government in May 2007.
As at today, Papalanto, Omotosho
and Geregu are generating power for the grid.
Gas pipe vandalism has affected them all. Since they were to be
expanded, there was work continuously going on for adequate gas provision,
transmission and additional turbines to reach the ultimate magnitude or
capacity of about 1000MW each. The problem of vandalism of gas pipelines
remains with them as with Egbin.
During our Administration’s first
term and going into the early part of the second term, we studied all the
available and possible sources of power and energy. These include solar, wind, tide, biomass,
thermal from gas, thermal from coal, thermal from nuclear and hydro. We realised that technology for mass production
of power from solar, wind and tide is still some distance away, and, therefore,
the unit cost is prohibitive. They will do for smallholding or domestic use and
we instituted concessionary policy to encourage such domestic or small-holding
installation and use.
For large scale power production,
we are left with thermal from gas, thermal from coal and hydro. We set for a twenty-year programme of nuclear
energy only after we have almost exhausted what we can obtain from other
thermal sources. After a visit to Omoku
where Rivers State was building a thermal unit close to an Agip gas source to
eliminate long distance gas pipelines that could be subjected to vandalism, we
embarked on the study and search for similar available gas sources close to
which other thermal plant could be located.
Six of such sites were located at Sapele (Delta), Ehobor (Edo), Egbema
(Imo), Gbaram (Bayelsa), Calabar (Cross River), Omoku (Rivers). That is the
beginning of what is today called NIPP.
It would be short in gas pipelines but might be somewhat long in transmission
to grid line.
We have to coordinate and
harmonise five aspects of the building of generation and evacuation unit in
each site – turbine, gas provision, civil works, electrical station and
transmission or evacuation. Unless all these are synchronised and brought
together, expenditure on four, leaving out one as uncompleted, will still leave
out power generation let alone having the power at our homes and
factories. No matter what resources you
may have, it will take a minimum of three years, if there are no interruptions
or disruptions and with hard driving, to complete any one of these units. Without hard driving and with any disruption,
it may take up to five years or more.
Now, with ICT taken over by the
private sector, we identified energy, transportation and water supply as major
infrastructural needs to make 20 20 20 a reality. If South Africa, with a population less than
one-third of Nigerian population, has a power generation of some 40,000MW and
yet still only an industrialising country, Nigeria will need close to 100,000MW
of power generating capacity to become a serious industrialising country. But
with the existing power generation capacity, the four thermal units earlier
embarked upon and the seven NIPP, if pursued vigorously, Nigeria was to have
10,000MW generating capacity by 2007/2008 and then move by leaps and bounds to
some 20,000MW by 2015. That programme is feasibly put in the pipeline but it
has to be driven to be achieved. As a
people who are desirous of making rapid economic and social progress, we have
no alternative. Talking of any
alternative can only be an idle talk or borne out of ignorance.
Fortunately, revenue from oil had
improved from 2003 and we have managed to keep some reserve to prevent the boon
and burst of the past when we spent all when we had money and went flat when
the oil price ebbed. After consultation
with the Governors, the Chairmen of Local Governments and the National
Assembly, it was agreed to finance NIPP from reserve of unallocated oil revenue
since energy touches every life and everywhere.
It was to be an investment contribution which is on the basis of revenue
allocation formula and to be refunded when NIPP is privatised on the same basis
of revenue allocation. At that time,
everybody agreed and we moved to finance NIPP on that basis.
In every case, to the best of my
knowledge, all contracts for NIPP were based on open-publicly-advised tender
system except for the turbines where the four major producers in the world –
GE, Siemens, Hitachi and Alshtom – were invited to submit tender. GE was the cheapest with the best terms all
round but particularly including establishing a repair and maintenance centre
in Nigeria. Turbines which were
custom-produced will only be produced when there is assurance of payment in
form of down payment or irrevocable letter of credit.
MOBILISATION FEE
To the best of my knowledge, the
government policy was to pay contractors only 25% mobilisation fee. However, it is not the duty of the President
to oversee such payment. You are well
aware of those whose duty it is to pay.
If a contractor, who has been paid mobilisation fee is not actively on
site, it will be wise to find out what the problem of such contractor may be –
violence in the Niger Delta, extortion of money by the so-called militant
groups, unfriendly community, waiting for raining season to go, awaiting
equipment from abroad or any other reason.
If there is a contractor that has taken mobilisation fee or any fee for
that matter and not performing, there is always the guarantee from his bank or
insurance that can be called. For
letters of credit, a contractor does not draw money until there is evidence of
performance normally in form of shipping documents which are negotiated between
the bank of the client and the bank of the supplier.
You may wish to know that any
allegation that companies are not registered or that non-existing companies
were paid are not matters for the President but for appropriate officers in the
relevant ministries. If this ever happened, there would have been a big syndicate
racket that should be broken and all concerned prosecuted because monies are
paid by cheques or letters of credit.
Companies will not have bank accounts opened for them without evidence
of registration and other documents authenticated. If the Committee has such a case, please
ensure prosecution without delay. Let me
just say that international and multi-national companies like the suppliers of
turbines do not necessarily need to be registered in Nigeria to carry out
operations, directly asking for waiver if necessary or through their local
representatives. I am, however, informed
that the issue of unregistered companies has since been clarified and the
Committee has received evidence of registration of all the 34 companies.
While looking for solution to our
energy problem, I visited South Africa where they depend heavily on thermal
plant based on coal, generating in total 40,000MW and planning to spend $21
billion in the next five years. We could
not embark on coal generated thermal until we can produce coal locally and no
private sector will be involved in coal or other solid mineral production
unless there is assurance
or expectation of reasonable
return on such investment backed by necessary law, regulation and survey. The solid mineral bill lasted two years in
the National Assembly. And no investor
could be persuaded to come to invest in solid mineral when there was no law in
place. The law came in the last quarter
of our Administration. Very serious attention can now be paid to thermal generation
from coal. Meanwhile, we have taken to
hydro to supplement thermal with Mambila and Zungeru and smaller potentials
from where we can generate almost 4000MW.
There has been some allegation of
waiver of due process. Let us all
understand what is meant by due process.
It is the rule or regulation put in place for systematic and orderly
business of government. Normal due
process for award of contract is advertisement or, in case of selective
tendering, ensuring sufficient number to avoid collusion. Then the tender should be publicly opened,
followed by analysis of the tender and award made on the recommendation by
those who analyse. Our Administration
set up a due process unit to ensure that another check is in place especially
with local contractor to see whether prices could be further reduced and to
issue a certificate to ensure that there is budget provision for the project,
the contract or the supply. All NIPP
projects went through due process to check on competence, prices, or cost and
were issued with due process certificate but exempted from due process payment
certificate since they were not projects on normal annual budget but on special
provision from excess crude and the fund being available there was no need to
cause any further delay in payment for such an urgent project where any delay
will be costly in human discomfort and inadequate power supply to industries.
The first set of invoices by contractors were delayed in due process office for
almost two months – an unnecessary delay which was holding up progress.
Let me plead with the Committee
again that where you have proven cases of fraud or corruption, please give
details of the amount involved, the bank involved, the persons involved. Where
it is corruption, the receiver and the giver. Not only should you make public
such proven misconduct, hand the offender with necessary documents to EFCC
and/or ICPC.
DOUBLE JEOPARDY
In all cases, in government,
during our Administration, we pursued the best interest of Nigeria and we went
to great lengths to ensure that the interest of Nigeria, Nigerians and the
government is protected. As the head of
that administration, I spared no public officer who committed any breach of
public order, integrity and propriety, particularly fraud and corruption. No matter how high an official was, he was
sanctioned for misbehaviour. In this
respect, I lead by example. But if your
Committee has anything to the contrary, bring it out here and now, to explain if
explanation is necessary.
Now, after it is all said and
done, the bottom line is that Nigerians need power and they need it now. Any delay is double jeopardy – there is loss
to our economic and industrial growth and, every month that the contractors are
wittingly or unwittingly prevented by whatever reason or excuse from embarking
on their jobs, Nigeria will pay
more. The hold-up and the delay that
have attended the projects in the
pipeline since May 2007 will, by my estimation, cause the nation not less than
25% more by the time the works are completed.
There is the danger that some of the equipment, particularly the
turbines that are now at the port and elsewhere in the country may suffer
deterioration if not kept in a special storage facility. And they may have to
be replaced or refurbished at a very high cost before they can be installed.
The point must be made and
vigorously too that 20 20 20 will be a mirage without adequate power supply and
adequate transportation. The private
sector will have to be involved in helping to provide these either as contractors,
suppliers or public-private partnership.
We cannot criminalise them, antagonise them, disgrace them and expect to
get the best support and cooperation out of them. Most of the contractors and suppliers are
companies and organisations with tremendous reputation and most of their
management and staff are men of honour and dignity. They deserve understanding and respect. Most
of them, as far as I know, have carried out the task consciously and
committedly. In all cases, there are
officials or Committees who are supposed to monitor them.
What I am saying is that the
legislature, whether in their legislative duties, their oversight functions or
in their investigative duties, must realise they share responsibility for
progress of the nation especially the economy.
Let the Legislature help the Executive in its onerous task of moving the
economy forward and in realising 20 20 20.
Theatrical or circus shows will
provide fun and maybe hurt some people but the reality will remain. Let us do everything possible to urgently
implement the projects in the pipeline to minimise the current agonies of the
Nigerian public. One year is already
lost, we cannot afford to lose another year without dire consequences in the
coming years. Let us all be
progressively positive and cumulatively constructive to move Nigeria
forward. Let us move away from ‘Pull Him
Down (Phd)’ syndrome.
In summary, when our
Administration came in in 1999, we met seven power stations – Kainji, Jebba,
Shiroro, Egbin, Afam, Sapele and Delta – all together in different stages of
disrepair and obsolescence, generating about 1500MW.
By 2007, we have added six new
stations as follows with the seventh almost completed at Alaoji:
Okpai in Delta – 480MW by Agip
Afam II – 276MW
Omotosho – 330MW
Palalanto – 330MW
Geregu – 414MW
Ikot Abasi-Ibom Power – 145MW –
to which Federal Government is a partner.
Alaoji – 545MW
To these must be added about
2000MW produced by Rivers State.
We must also take cognizance of
the heavy rehabilitation works in all the existing power stations: increasing
their available capacity significantly.
There are six NIPP projects in
the pipeline and the expansion of Omotosho, Papalanto, Geregu and Alaoji to
about 1000MW each by combined cycle and 2500MW from Mambilla.
In other words, in eight years of
our Administration, we have provided six new power generating units of almost
2000MW.
There was no transmission work
embarked upon between 1982 and 2000. But
by May 2007, we have taken transmission to Bayelsa State for the first time,
double the transmission from Shiroro to Abuja to ensure stability of
supply. We have also awarded all the
transmission contracts to close the transmission loop and ensure that vandalism
of transmission or any fault in the transmission line will no longer keep any
part of the country in the dark if there is adequate power generation. This is to ensure stability of power supply
nationwide. At the same time, we have
embarked on pre-paid meter system to reduce non-payment of electricity bills
and eliminate unauthorised connection. We moved from revenue generation of about
N2billion per month in year 2000 to about N7 billion per month in 2007. Repairs on the pipeline that was vandalised
in February 2006 and which began immediately were completed only in March 2008.
MONEY SPENT
Finally, let me come to the
quantum of money spent on power from 1999 to 2007. Various figures have been banded around
ranging from US$4 billion to US$16 billion.
They may all be right or they may all be wrong depending on what anybody
takes as expenditure most of which is constant no matter what amount of power
is generated, transmitted or distributed, your figure can be as high as you
want to make it. That figure will
include personal emolument of staff, pensions, gratuities, transportation,
maintenance, rural electrification, etc.
If you take staff emolument, etc,
out and limit expenditure to only running or operating costs and capital
expenditure for generation, transmission and distribution, you will get a new
set of figures. If you add power-related
training and expenditure in other ministries and departments such as education,
NNPC and industry you will get yet another set of figures. If you limit yourself to capital expenditure
and running costs you will get a set of figures that can truly be said to be
really expenditure on power.
I have been told that the figure
in this regard from 1999 to 2007 is in the region of $6.5 billion including
outstanding letters of credit. But
whatever figure you choose to take, to say that there is little or nothing to
show for it is the greatest understatement of the year which will tend to
portray inadequate knowledge or ignorance.
From what I have said above,
there are results to show for the expenditure. What is required is serious,
adequate and committed follow-up and sustenance from where we stopped. If the
total expenditure has not translated to power availability at our homes and for
our industries, it is because the little additional expenditure that is
necessary for completion or for sustenance has not been made. For example, if you spend $200 million on a
power station and the switch gear costing less than half a million dollar is
not installed, you will not get the benefit of the $200 million already
invested. For the uninitiated, nothing
has happened.
Let me, at this juncture, crave
the Committee’s indulgence to express appreciation, once again, to those my
colleagues, collaborators and assistants who joined hands with me in serving
Nigeria loyally, committedly, honestly and sacrificially. You have done your best for your country, you
have made your mark and I am sure the fruits of your labour will continue to be
seen and surely appreciated. I am proud
of the achievement we have made together. One thing that anybody may charge
against almost all of us under our Administration who were involved in solving
the power problem from 1999 to 2007 is passion and zealousness. I will, however, accept such a charge without
any apologies as I see passion and zealousness for the good of Nigeria as a
virtue worthy of emulation.
I thank friends, relations,
well-wishers and concerned citizens who have got in touch with me by letters,
telephone calls, e-mails and text messages to express their feelings and
concerns. The lot of reformers must be
understood is not without its pain and stress.
We have no regret for all that we have done for our country and
humanity. We thank God for the opportunity to serve Him by devotedly serving
our country and we thank Him for His grace. We also thank Nigerians and friends
outside Nigeria who appreciate what we have done. I am so confirmed and
encouraged by the good we have done for this country politically, economically
and socially that I have no regret whatsoever.
We have taken Nigeria to where it should be within the limited time we
had.
Honourable Chairman and
Honourable Members, thank you. I am
ready to deal with any allegations or approvals which my presentation to you so
far has not clarified or adequately explained.
But let me just add that no approval or programme or policy was granted
or embarked upon for personal enrichment or aggrandisement. If, however, any official or public officer
has made a genuine mistake, he or she should be sanctioned and corrected at the
same time. I understand that threats for
all sorts of spurious reasons are being issued for other investigations, no
honest officials or political officers who served in my Administration should
feel threatened by such threats if their hands are clean and clear.
Chief Olusegun Obasanjo, GCFR
May 12, 2008
Culled: TheCable
Player pls don't take us for granted things have change we are not fools like u. U can not bring people into power and tell us that they investigated u for what u have done, Nigeria is above that Ex Corrupted Mr President and we all know what u have done with this country such as stilling, three to six month of police training school, free border, privatisation, selling government properties, building private school, power sector etc. all this are now back fired. So we do not understand what u are trying to explain about the $16 billion for power sector while in my community this was the eight (8) month with no electricity.
ReplyDeleteSo much story, but, justification of the amount spend has no physical result felt by ordinary citizen of this country. Privatization, selling discos to self and associates put this country in a serious situation.
ReplyDelete