Professor Barth Nnaji, former Minister of Power, and promoter of the Aba Power project is not happy with the Bureau of Public Enterprises (BPE) and tells IKECHUKWU AMAECHI why in an exclusive interview in Porto Novo, Benin Republic.
It has been long now since you left office as Minister of Power. What have you been doing?
When I left government, I continued my work at Geometric Power and we have an integrated power project in Aba that I needed to work with my team to complete and in addition, there are some other projects that we initiated in collaboration with General Electric (GE).
How far have you gone with the Aba Power project? A lot of people had expected that it would have been ready by now?
I agree that it has been there for some time but I am happy to say that it is pretty much completed. The power plant, sub stations, and power lines are all done basically, just awaiting commissioning.
Within the next one month, we should be able to do the commissioning of the power plant. It has been there but you should also understand that even the NPP projects that are older than this project have not all reached the promised land. So, it takes a while for projects to go through the gestation period and be completed properly.
What is the capacity of the project?
141 megawatts will be the capacity of this phase and then we are working on the second phase that will expand it by 375 megawatts.
So, where does General Electric come in here?
We have a joint venture agreement with General Electric to build a power plant of 500 megawatts and the project is quite advanced. So, it is the very first one that GE is doing with a company in Nigeria and we are quite happy with the relationship and the arrangement.
If you commission the first phase of the Aba Power project, when will the second phase commence?
Three years from now.
This is the first private power project in the country. Now that we are talking about days and no longer months concerning commissioning, how do you feel?
I feel extremely proud that in spite of all odds that we are here. When we started there was no private power company that was doing power at the magnitude and this is the first indigenous power company in Nigeria.
So we are quite proud – myself, my team, our investors. Everybody is quite proud to be here. It has been a very long and tedious journey. We met a lot of challenges on the way but our people continued to work. They persisted and persevered to reach this point.
What are these challenges?
They are too many, but I will tell you a few. Of course, one major one was the financial meltdown. For a project of this magnitude, by the time we were on a home stretch so to say, we needed about $100 million more to finish the project and we had commitments from the banks for the disbursement of the fund but financial meltdown hit and their international investors withdrew their commitments, so the banks withdrew their commitments from us as well.
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So the project stalled for more than two years and if it wasn’t for the way the project was designed for success and stability, we would have just closed shop but we are happy that investors continued to express their faith in the project.
Of course that caused significant delay. The second is that we had one of our expatriate workers kidnapped and because we had to go through that trauma and negotiations and as soon as we got this expatriate worker released, he went home to his country in Europe.
We had the Bureau of Public Enterprises (BPE) that took the Aba project that is actually ring-fenced in an agreement, and sold it to a company that was a distribution company in spite of every clear indication that this agreement is there, they still went ahead to sell the place without taking out Aba-something that no organisation that is looking for the success of the power project in Nigeria will do.
But it was done and we have had to contend with that and to ask the government to please resolve the issue. We even had to go to court when they were not willing to listen. So, it has been quite a challenge in that regard.
There are so many other issues like youths of the area doing the sort of things that you find in Niger Delta in those days and we have had to deal with that or the traditional rulers of the area doing the same thing which is basically, extortion of sorts.
Then the company that was building the gas pipeline had significant delays in completing their job, so we have had to deal with that.
So many issues, but normally an independent power plant wouldn’t get into all these problems if it were a straight independent power project but because it actually has four contracts – power plants, sub stations, gas pipeline overhead lines, all in one project. So the time taken which is shorter than the time a typical NIPP project has taken is actually quite good, that we have done all these things within this time frame.
So, there was basically no power infrastructure that you can build on?
Nothing. We had nothing. When we started the Aba IPP and bought the land, it was bush, and we started from there and built all these things.
The complaint of the NIPP companies is lack of gas. How do you source your gas?
We are getting gas from Shell and we negotiated about four and half years ago to buy the gas from four entities – Shell, Agip, Total and NNPC. They are the ones who own the gas but shell is the company supplying on their behalf.
How is the privatisation of the PHCN, a process you championed impacting on the Aba project?
The basis of doing the Aba integrated power project in the first place was the concession of Aba metropolis – the network of the Aba metropolis to Aba power, our company. And with that concern, it is like cutting out Aba electricity network from the national grid.
And so Aba is technically not part of the other distribution companies. It is a distribution company onto itself. So, it is a separate distribution company. That is how you look at it.
So you generate, distribute and transmit at the same time?
No, there is no need for transmission because it is a local grid. We just generate and put it on the local distribution network but it is two separate companies. One is a generating company – Geometric Power Aba Limited, and the distribution company – Aba Power.
Aba Power is the one that has the concession for the network from government and based on that, Aba Power distributes power that it takes from Geometric power to all the consumers. But it has improved the network by refurbishing three existing substations and building four new ones.
We also build 110kva of overhead lines to support the existing 33kva networks. So the transmission line in distribution is 33kva lines in Nigeria and so we built a 110kva of it in Aba.
Are you promising Aba residents 24-hour power supply?
Absolutely. We will make Aba like any other part of the world that has reliable electricity. It will be quite a pleasant thing and it will be a demonstration of the impact of the power sectorreform because this will be the first fruit of power sector reform in Nigeria and people can now see what a reformed power sector will look like.
You also had a power project started in Abuja in 2001. What happened to that project?
It was a contract for a short period of time. In fact, it was for two years and eventually extended for another four months because that was a period when Shiroro Power Plant was being completed, actually power line from Shiroro to Abuja, Katampe to be specific, was being completed.
So, during that period, Abuja needed supplementary power and so, our company and an Irish company called Agreco were contracted to build power plants that would guarantee 15 megawatts each.
So, we built our own and it taught us some very important positive lessons that if you ring fence power, you will get more reliable electricity. It is quite intuitive. That was why we went to do it in Aba, finding that Aba people needed power.
The Minister of Finance at the time, Dr Ngozi Okonjo-Iweala, went with then President of World Bank, James Wolfensohn, to Aba and they invited me along and they asked Aba people at Ariaria Market what their number one problem was, what it would be that if they got that, they would improve the quality and quantity of their production. And they said power.
So, that was how we began to develop the power project. This happened around 2003-2004.
Why did you decide to take the power project to Aba?
Well, Aba because it is a huge commercial centre in the region. It is very close to gas. Those two issues are critical. One is how do you guarantee sale of your power and how do you guarantee fuel supply for your power? So, that is why we chose Aba.
Beyond Aba, what impact do you think this project will have in the South East?
Quite impactful because Aba is a centre of commerce in Igboland and beyond. Yes, a lot of people who do business in Aba come from not just Abia State, but Anambra, Rivers, etc. You also have people from other states, Akwa Ibom in particular because the Ikot Ekpene Road, if it is working, you will simply have people from Akwa Ibom freely coming to Aba.
Then of course, from Aba to Port Harcourt is so short a distance that the two cities could easily merge. Over a short period of time if you have electricity in Aba because people will cross over the Rivers State border and build facilities. So, also will people from Imo State. So Aba will grow quickly, very, very quickly because of the availability of electricity.
The Aba project was started long before you became Power Minister. When you left, there was this talk about conflict of interest. What really happened?
Everybody knew about the project before I became Minister. In the Senate, there was this question I was asked and I was very clear about it. Generating Power is always there, it is a company and I had put my shares in a blind trust.
So, it is not something that I really want to get into but the Nigerian Senate knew who and I don’t want to talk too much about it. I want to operate transparently like any other international operator would. There is no other way.
Do you think the power sector reform is still on course? What hopes do you have for it?
We will contribute out quota to support the power sector growth and I think that what Nigeria has to develop is the capacity to do the sort of work that we do.
We don’t want to be the only power company but we want to continue to do a very good work in support of the sector, build more plants and distribute power in the best way possible, to show efficient standard that the world can look at and say, these people are adopting the best practice. So, there is a lot of hope for the power sector.
The privatisation is very important for Nigeria because it ensures that the private sector is able to invest in improvement of distribution networks to bring distribution companies to credit worthiness and also expand capacity like if you purchase a 900 megawatts power plant but that plant is generating 300 megawatts, then you know you have improved the generation capacity to 900 by replacing unit.
Because one of the things is that the corridor for the expiration of power will still be available to you if you had those 900 megawatts for example. And some may even wish to do more than just merely expand to the capacity. They may wish to build more and that is where Nigeria gets the benefits.
Would you say the power reform programme you vigorously pursued is still on course?
I will say that it is. Of course, I think that privatisation had reached a point of no return by the time I left. I don’t want to comment too much on execution because I didn’t execute the whole thing to its finality. So, I don’t want to go judging anybody in the sector. I just want to say the reform is continuing.
Do you intend to replicate the Aba power project in any other place?
Yes, we are doing the GE power project which is about three times the size of our current power plant.
Is it in the same Aba?
Yes, but technically, it is not in the same Aba metropolis. It is in Ukwa West LG. So, we are building another power plant. We are also expanding the current one. So, there are two projects that we are doing which is important expansion of power in Nigeria.
And we are not adverse to doing projects in other places where the various things that come together to build project actually exist – location, fuel, ability to export power. If they are there, fine, we will go in.
How soon do you hope to recoup your investment considering the huge cost?
Power is not something you invest in and hope to recoup in just a matter of years. It is a long term journey and you have to be willing to embark on the journey. That is how power is.
