Last Wednesday, the federal government confirmed Joseph Chiedu Ugbo as substantive Managing Director of the Niger Delta Power Holding Company (NDPHC), a special purpose vehicle funded by the three tiers of Nigeria’s government to fast-track power generation and delivery in the country.
Through a circular from the Office of the Secretary to the Government of the Federation, Ugbo, who acted in that capacity for close to two months after the government relieved NDPHC’s pioneer head, James Olotu, was asked to lead NDPHC into its next phase – a make or mar phase as it appears.
For Ugbo and his team, sector analysts believe that their job is simple – get NDPHC profitable in terms of project management.
Ugbo from the government’s circular on his appointment, may not be lacking in paper and applied qualifications. He appears equipped for the job at hand, but as it is always stated, a book is best judged not from its cover but its content value.
According to the circular, Ugbo as a legal practitioner, was called to the Nigerian Bar in 1991. He is reportedly a specialist in infrastructure regulations with a robust experience in electricity industry reform and privatisation. He also holds Bachelor and Master of Law Degrees from the University of Lagos.
For over 15 years, the circular said he provided legal advisory services to public sector power entities including legal support to the defunct National Electric Power Authority (NEPA) which metamorphosed into the Power Holding Company of Nigeria (PHCN), and to the Bureau of Public Enterprises (BPE) during the privatisation of the successor companies PHCN.
Going by this, Ugbo can aptly be described as one who knows Nigeria’s power sector well, and so should have minimal difficulties moving things around for the NDPHC to come good on its mandate of improving Nigeria’s wretched public power system.
Alongside him, the government also approved the appointment of two executive directors for the company. They are Babayo Shehu, who will be the Executive Director Finance and Administration and Ife Oyedele, as the Executive Director Engineering and Technical Services.
Like Ugbo, both candidates are reportedly with enviable qualifications. Shehu has a First Class Honours Bachelor of Science Degree in Accounting from Ahmadu Bello University, Zaria. He is a Fellow of the Institute of Chartered Accountants of Nigeria and the Chartered Institute of Taxation of Nigeria.
Accordingly, he began his working career with the Bauchi State Development Board in 1981, and has worked in the country’s banking sector from 1987 to 2003 before he joined the federal public service in 2003.
Oyedele on the other hand graduated with a Bachelor of Science Degree in Electrical Engineering from the University of Lagos in 1982, and has being a member of the Nigerian Society of Engineers and Institute of Directors.
Between 1982 and 1992, Oyedele worked in both the public and private sectors. He reportedly established his own company, Messrs Matcom Limited in 1992, and was its Managing Director until he was appointed into the NDPHC.
The new team at NDPHC has no other task but to reposition the NDPHC to profitably play out the role for which it was set up in Nigeria’s power sector.
In the last couple of weeks that Nigeria’s public power system has shown its defining flaws, random views shared with THISDAY by industry experts have shown that the choice of setting up the National Integrated Power Project (NIPP) and have NDPHC run it has not really given Nigeria the sort of outcomes it projected.
As a fast-track initiative, the NIPP was meant to stabilise the country’s electricity supply system. It was to do this with the construction of 10 gas fired power plants – seven situated in the Niger Delta for ease of access to gas feedstock, another three situated side by side with existing plants in the south west to enable them share gas supply infrastructure.
These plants were to give out a cumulative generation volume of 5055 megawatts (MW) of electricity which will be transmitted and distributed to consumers using as well the 114 transmission lines and substations and 296 distribution injection substations built in its entire scope.
But at the moment, productivity from the NIPP which was conceived in 2004 to add significant new generation capacity to Nigeria’s electricity supply system along with the transmission, and gas supply distribution infrastructure needed to help it has continued to vacillate for reasons related with poor project management and unhealthy bureaucracies.
While some of NIPP’s generation projects which have defined completion timelines are yet to fully come on stream – Alaoji -789MW; Calabar -630MW; Gbarain -252MW; Omoku-252MW; and Egbema- 378MW – due majorly to construction delays, productivity from the 750MW Olorunsogo; 504MW Sapele; 495MW Geregu; 504MW Omotosho and 504MW plants have experienced casual fluctuations on account of gas supply issues.
Though the NDPHC had in the past claimed that seven of the 10 power plants have been in operation and producing 25 per cent of Nigeria’s generation output despite these challenges, experts believe that the $7.1 billion generation assets should be doing more than they do today.
According to the experts, the initiative was set up to run seamlessly, but it has so far experienced unnecessary encumbrances typical of public project implementation in Nigeria.
“The NIPP situation is a classical Nigerian way of doing things. Delays and in some cases, lack of seriousness to deliver key infrastructure projects,” said Dan Kunle, an energy expert.
Kunle, a former official in the past government of Chief Olusegun Obasanjo, has a deep knowledge of the NIPP conception and project expectations. He told THISDAY in an interview some months back that it was completely unnecessary for Nigeria to have dragged on with the NIPP for over 10 years now.
He also explained that despite the initial challenges which resulted to the suspension of the project, works on its generation aspects should have been completed long before now to give the country some leverage in its power generation capacity.
According to him, issues of inadequate gas supply to the plants even after close to $500 million had been put into building and upgrading gas supply infrastructure, have continued to put a big question mark on the values the NIPP has so far brought to the country’s power supply system.
“What is the point of having power plants with no gas to turn them on?” Kunle asked. He further said: “The fact that some of these plants do not have gas supply to them shows how unserious we can be sometimes with planning and executing key infrastructure projects to the end.”
“While I completely give it to the NDPHC for mustering that quantum of assets, the assets are huge and robust especially the transmission networks, I also believe that the power stations should have been completed by now and everything related with its first phase completely forgotten,” he added.
Kunle explained that it was because of the country’s irrational decisions on completing the NIPP generation plants as at when due with its associated gas infrastructure that has cost it the opportunity to have private investor buy them over in a privatisation exercise that has been on suspension for more than two years now.
He stated that the government which is currently running the plants that are in operation through the NDPHC does not have the capacity to do it under an Operation and Maintenance (O&M) arrangement. The NDPHC supervises this O&M framework in some of the plants like Geregu-2.
He added that the financial values attached to the plants during the privatisation rush in 2014 would have plunged on the account of the many challenges of the plants.
“How many megawatts of power are they putting on the national grid today? Very minimal because the government has remained adamant and allowed private investors who would add value to them go away.
“Government is doing the O&M by itself but I insist that it does not have that capacity. It should allow people who know the power business to bring out the values of the NIPP plants.
“There is no way the government can run these plants efficiently otherwise the whole idea of privatisation would mean nothing,” added Kunle.
Another industry source anonymously told THISDAY that the NIPP initiative was suffering from misplaced planning, especially with adequate provision for gas feedstock.
The source said with the vast transmission infrastructure built by the NIPP, transmitting power from its stations should not have been a challenge but for the lack of power therein.
“But because we deliberately plan without focus, the NIPP is in what I can call a limbo because it is neither giving out the values it ought to give or allowing others who have the capacity to do,” said the source who worked in the Nigerian National Petroleum Corporation (NNPC) and has vast knowledge of how gas supply arrangements work.
Tasks before Ugbo and his team
As at the last count, a decision on how the stalled NIPP privatisation has not been taken or made public by the government. The process, which was initiated in partnership with key stakeholders like the BPE has not progressed because preferred bidders refused to close the deal on account of unfulfilled sales agreements with the government.
One of such issues identified by preferred bidders of the 10 plants was lack of gas supply to the stations, Ugbo and his team would have to find a good enough solution to this critical issue, and quickly push the government to take a decision on the privatisation process.
There are indications the government may be considering a piecemeal approach to the privatisation, that is, one-by-one sale of the plants based on their production readiness and willingness of the preferred bidders. If this is considered a good option, the new team has to be fast in implementation and make funds available for the second phase of the NIPP.
Another critical issue the team would need to be proactive on it happening is the completion of plants that project consultants have delayed for so long. The Alaoji plan is one of such projects that have lingered well beyond its project implementation timeline, Ugbo and his team would need to be transparent and decisive in dealing with this knotty issue amongst others that have kept the value of the project from being realised.
The poor state of the NIPP has also not been without the contribution of the country, which reportedly owes the NDPHC about N99 billion in debt for energy supplied to the national grid. This huge financial debt to the company means that it is running its O&M operations unprofitably in the plants under this arrangement.
Running a company on this reported state means that it is a charity organisation that is heavily dependent on subvention. And with Nigeria’s current economic status in consideration, Ugbo and his team has to recover debts owed NDPHC by the country’s electricity market.
Also, the second phase of the NIPP in which NDPHC plans to build identified hydro power plants up north, and complete transmission projects that were carried over from its first phase demands that Ugbo and his team initiate and stick with credible project procurement and implementation processes to avoid such unhealthy issues that are associated with the first phase and which also delayed the completion of projects in that phase.