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News & Press Releases

Power Probe:
Atiku Ready to Face House

THIS DAY Monday, March 24, 2008

Due Process DG clarifies statement
Rockson alleges breach of contract

Former Vice-President, Alhaji Atiku Abubakar, has said that he will honour the invitation of the House of Representatives committee probing the National Integrated Power Project (NIPP) if invited.

Also yesterday, the Director General of the Due Process Office, Mr. Emeka Eze, clarified his statement on the NIPP projects, insisting that although the projects passed through the office, the payments were made without recourse to the office.

Declaring his intention to appear before the House, the former vice-president, who chaired the NIPP committee, said he did not however think he had any insider's information to give the lawmakers because he was sidelined as chairman.

The Chairman of the House of Representatives committee on Power and Steel, Hon. Ndudi Elumelu, had said last week that former President Olusegun Obasanjo and his former deputy, Abubakar, might be summoned to appear before the committee if there were clarifications to be made on the NIPP contract awards.

Abubakar, speaking through his Media adviser, Mallam Garba Shehu, said: "if an invitation is extended, as a law abiding citizen of this Country, he would certainly honour the invitation.

"If invitation is properly extended to the former vice-president, he would honour the invitation, but it would be a mere waste of time as Atiku Abubakar as the former vice-president would have nothing to tell the committee.

The reason for this, Shehu said, was because "he has no insider's information to offer to the committee. It is true that he was appointed to chair the NIPP committee, but also counter directive was given to members of the NIPP committee not to vice president presiding.

"So Atiku's presence at the committee would be both tantamount to wasting the time of the House of Representatives Committee and that of Atiku himself. The truth of the matter is that Atiku was sidelined as far as the NIPP committee is concerned. The former President asked the members of the committee not to see Atiku. So, he has nothing to offer."

The DG of Due Process Office was reacting to THISDAY's report yesterday which showed that at least 29 companies which undertook projects under the NIPP were issued due process certificates.

Documents obtained by THISDAY showed that 29 companies which were awarded contracts under the NIPP project were issued certificates for contract awarded by the Budget Monitoring and Price Intelligence Unit (BMPIU). It was clearly stated on the certificates that "the project(s) satisfied all due process requirements for proceeding to seek Federal Executive council (FEC) consideration."

Eze had last Tuesday stated before the House of Representatives committee on Power and Steel probing expenditure on the power sector between 2000 and 2007, that the $3.54 billion NIPP projects being a presidential intervention did not pass through the Due Process Office for payment and so his office had no knowledge of the payments being revealed before the probe panel.

But explaining the difference between the Certificate of contract Award and Certificate of Payment, Eze said "the Certificate of Payment is what the Accountant General uses to mandate payment of Federal Government money by the Central Bank of Nigeria (CBN) to the spending unit on behalf of the Federal Government's contractors."

Eze said: "The Certificates of Contract Award are based on the process review by Due Process Office and merely enables the spending unit to move forward to seek the final approval of the Federal Executive Council (FEC) to award any Federal Government Contract. The only use of such certificate is to enable the ministry seek FEC's final approval to award. It is not a certificate to make payment as your story asserts. What you published is certificate for award of contract which I repeatedly said we issued."

Key figures involved in the NIPP projects had since the beginning of the probe initiated by the House of Representatives appeared before the investigation panel of the lower chamber of the National Assembly during which startling revelations were made regarding expenditure on the NIPP.

Meanwhile an indigenous company, Rockson Engineering Ltd, the contractors handling some of the power projects, currently being probed by the House of Representatives Power and Steel Committee, has said the Federal Government is indebted to it to the tune of N12 billion for all the work it has executed so far.

The company has also accused the Federal Government of delaying the projects' take off by not meeting its contractual obligations.

For instance all the four gas turbines for the Alaoji projects brought into the country site since 2006 are still at the Onne Port, Port Harcourt, due to the inability of the contractor to move them to the project site.

Aside from the turbines, other equipment meant for the projects that arrived in the county between 2006 and 2007 are also lying fallow at the same port as the consignments could not be cleared due to documentation problems.

Rockson was awarded Engineering, Procurement and Construction (EPC) contract for some power projects, three of which are under the NIPP.

The projects are for the Alaoji Power Station (Phase 1 and 2), expected to generate 1074MW electricity, Egbema Power Station (Lot 2: NIPP) for 250MW, Gbarain Power Station (Lot 4: NIPP) for 250MW and Omoku Power Station (Lot 7: NIPP) for 230MW.

Briefing media executives, after an inspection of the projects at the weekend, Managing Director (MD) of the company, Mr. Joseph Arumemi-Johnson said contrary to reports that the company had been paid N80 billion, the Federal Government is actually owing it about N12 billion for the work executed in the first phase of the project.

He said for the Alaoji project, signed on March 28, 2005, the value of the phase one of the contract, which was for the procurement of three gas turbines, was $164.5 million.

According to him, the company has received 75 percent of the said amount and 80 per cent for the additional scope which was for the fourth gas turbine and civil works for the second phase of the project.

For Addendum 2, which involved the relocation of the project site from Alaoji to Umuobasiukwu in Abia State, the value was $123.3 million, but that since May 10, 2007 when the contract for the additional scope was signed, there is no Letter of Credit (LC) and the company had also not received any payment, but had gone ahead to relocate the site and even procured the equipment for the project.

He explained that for the Gbarain/Ubie project, the company was yet to draw the five per cent of the LC, even though it had submitted the invoice.

For the Egbema project, Lot 2, he said the government has made advance payment of 25 per cent of the $128million, and that Rockson had put invoice for five per cent of the LC. For the lot 6, which is for Transmission, he explained that although the company had done some jobs, it was yet to receive any payment.

The Rockson MD noted that the Omoku Power station extension project, which was valued at $120million and the additional scope, valued at $41million were not effective because the company had not fully received the 25 per cent of the contract sum from the government. He said the government offered only 16 per cent and that the company had not drawn from the Letter of Credit.

Arumemi-Johnson maintained that due process was followed as the projects were awarded to his company after certification for award by the Budget Monitoring and Price Intelligence Unit (BMPIU), now the Bureau of Public Procurement (BPP) and that approval for the contract was given by FEC.

He stated that notwithstanding the encumbrances encountered on the projects, the contracts were all within the signing date, adding that if government played its own part, the target date would be met.

However, some documents obtained by THISDAY at the weekend revealed that the Ministries of Work, and Transport, as well as the Nigerian Railways Corporation turned down a series of requests by the contractor for assistance on the movement of the turbines to the project site since the heavy duty equipment cannot cross over the Imo-River Bridge.

He said: "For the Alaoji plant, as soon as we signed the contract, we ordered for the gas turbine from General Electric (GE) for three gas turbines. And when we waited to get the site, the site was not handed over to us, because they had community issues. We loaned the PHCN N161million to pay the people so that we can get hold of the site.

"If we are not interested in the project, we could have just collected the 25 per cent, sit down and be looking, even if we found money and make up the remaining, the contract is not effective. The three gas turbines came in even before the government opened Letter of Credit, because the government opened the letter of credit in November 2006 to the tune of N37m. That means they did not fund it fully, they were funding it piece meal. The gas turbines took between 16-18 months to manufacture and we had got the letter of credit fully established for this, because GE will not start manufacturing except they get the full value of the letter of credit.

"And of course, we have Hyundai; you saw all their equipment at the Onne Port and at the site. So when we are saying how much has been paid, we say we have letter of credit for $164.5 (for Alaoji phase 1), and this does not include gas turbine cost. So, about 70 percent of the amount was expended on off-shore equipment.

"The same thing with the fourth gas turbine, it took the government three months to pay us for that and then the sub structures, the piles we are doing for that. We cannot draw our remaining money fully because we are not allowed to cross Imo River because it has to do with construction.

"We are supposed to transport the gas turbine from the port to the site, but we made it very clear in the contract that we are not responsible for repairs of roads or strengthening of bridges. So if the roads and bridges are good, it is our responsibility to do that. We told them we wanted their permission to be able to carry the gas turbine about 200tonnes and above over the Imo River, they wrote back to us and demanded that we should give them all information about the weight, the parameter and everything, and we gave to them, but they wrote on October, saying they will not approve it, that the weight is not the design of the bridge that the bridge was only designed over about 20 years ago for 180 tonnes, "he said adding that the request to explore the alternative of building a ramp to move the equipment has also been rebuffed.

"So the progress on site is seriously hindered. If we had done this since July, by now we would have carried the gas turbine and the huge population would have been relieved of being in the dark.