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News & Press Releases

Power: 125 containers trapped at Onne

THE PUNCH, Monday, March 24, 2008

At least 125 containers valued at over $34m (N3.9bn) meant for some of the projects under the Federal Government's National Integrated Power Plant programme have been trapped in Onne, Rivers State since 2006.

The containers cannot be cleared due to bureaucratic delays between the Power Holding Company of Nigeria and the Central Bank of Nigeria, regarding the opening of Letters of Credit to fund the shipments.

The demurrage on the equipment is now in excess of 1.1m euros and still climbing, due to documentation problems, and none of the respective agencies of government, including the Ministry of Energy (Power) and the Power Holding Company of Nigeria has visited the Port, to ascertain the state of things.

In addition, there are a numbers of gas turbines worth $45m each and generators, also trapped for the same length of time at the same port, due to the refusal of the Ministry of Transport to give approval for an alternative route to their various locations in the Niger Delta. The accessories, turbines and generators are meant for various independent power projects in Rivers, Bayelsa, Abia and Imo states.

A visit to Onne on Friday revealed a yard filled with containers and the turbines, some with LoC No: CBN/DCO2492/0656 and Form M cannot be moved out of the port.

Incidentally, the two-year warranty for the equipment would soon expire long before their installation to test their efficacies at the various IPPs.

Speaking with journalists on Friday in Port Harcourt on issues surrounding the execution of contracts under the NIPP, the Managing Director of Rockson Engineering Company Limited, contractors for seven of the IPPs, Mr. Joseph Arumemi-Johnson, stated that contrary to popular belief, the Federal Government was yet to pay them fully for jobs already done.

According to him, "We are being owed over N12bn for jobs already executed on the IPPs. Under the terms of the contracts, LoCs are raised only on delivery of the projects according to the stages of performance."

In spite of the huge debts, he said, "All the materials for the various IPPs have been procured and we are still within the contracts period because their delivery dates starts from May 2009."

Although the total contract sum for the seven IPPs being handled by Rockson are valued at over $1.27bn, however, some of these contracts do not yet have effective dates, or LoCs raised for them.

For instance, there are no LoCs for Aaoji Phase 2 conversion to combined cycle plant valued at $357m and the Alaoji Change Orders to relocate site both in Addendum 2 valued at $123.3m, both signed in May 2009 (edited: May 2007)

According to Arumemi Johnson, "LoC is a guaranty for payment. When we do procurement, the manufacturers will submit CCVO, which is given to the CBN. The CBN in turn sends it to PHCN, who verifies that the materials have arrived, they sign and return back to the CBN, which then approves for the bank to pay."

Journalists' visit to all the plant sites in Alaoji, Abia; Egbema, Imo; Omoku, Rivers and Gbarain, Bayelsa, showed a high level of construction works going on in all of them.

Speaking specifically on the containers trapped at Onne, he said, "We cannot move them out due to discrepancies in documentation, as the CBN and PHCN insisted it the documents should have read, FME/PHCN, instead of NIPP and the Bills of Laden, must be returned to the shippers and this is now with the CBN."

For the turbines and generators, he said, attempts to move them across the bridge at Imo River, the boundary between Rivers and Abia states, could result in the collapse of the bridge, which was built over 20 years ago to carry a weight not exceeding 150 tones. He said Rockson had written many times to the Ministry of Transport to allow it ferry the heavy load across the river through the construction of a ramp, but the ministry had constantly refused on the grounds that it had never heard of transportation by a ramp, and instead, asked it to dismantle the turbines and generators as component parts.

The Rockson boss however, stated, "The equipment cannot be transported as CKD, because not only would it lose the manufacturers' Warranty, but manufacturers have stopped manufacturing them as CKDs, as they now come as modules, because of difficulties in aligning the parts."

Upon insistence, the ministry asked Rockson to approach the Nigeria Railway and the Nigeria Army for assistance, both of which refused on the grounds they did not have any equipment to carry such heavy turbines, the least of which weighed 200 tonnes.

Although he disclosed that the company had written to the manufacturers for extension of deadline for warranty, but this, according to the manufacturers would be considered at very high cost.