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How Delta State Government spent over N20bn on two IPP projects that are yet to generate power

By Isaac MARSKSON



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THE idea of building an Independent Power Plant, IPP, for Delta State to address its power problems was first mooted in 2000, during the administration of Governor James Ibori. During his tenure, Ibori appointed a consortium of engineering firms to undertake a power survey of Delta State. The consortium was made up of three companies: Engineering Management Support Limited, Optimal Power & Control Engineering Limited, and George Spiropoulus & Associates. At the conclusion of its assignment, the consortium submitted a report that estimated that the power demand for Delta State would be between 440MW and 570MW.

However, Ibori, who left office in May 2007, did not take on the IPP project, but Emmanuel Uduaghan who took over from him did.

IPP Project
Entrance of abandoned IPP project, Oghara

The N23B IPP Project in Oghara.

In an executive council meeting held in May 2009, Governor Uduaghan approved the contract award for the acquisition and installation of two Open Cycle Rolls Royce Trent 60wle phase 111 Gas Turbine generators capable of being fired by natural gas and diesel oil.

The turbines were to have an installed capacity of 116MW and expected to generate 100MW of electricity for the State Independent Power Plant (IPP) project.

The contract was awarded to Davnotch Nigeria Limited, in partnership with an American firm, Southern Integrated Energy Limited, at the cost of $125million (one hundred and twenty five million dollars). The dollar exchange rate used for the contract was N176 to a dollar, which translated to N21,750,000,000.00 (twenty-one billion, seven hundred and fifty million naira).

In 2010, Ovuozorie Macaulay, the then Commissioner for Energy, in his brief to the state’s Economic Management Team, disclosed that the government paid 60% of the contract sum to Davnotch that same year. At the time the contract was awarded, one of its owners of the company was Victor Ochei who was at that time the Speaker of the Delta State House of Assembly.

Further investigation revealed that the contract sum of N21.7 billion did not include land acquisition, appointment of Prime/Resident Consults, Insurance coverage, Environmental Impact Assessment (EIA), construction of 132/33KVA transmission line to evacuate power to be generated and construction for gas supply for the IPP project, a development that led to the upward review of the contract sum in 2010 to N23.2 billion.

Governor Uduaghan Fails to Complete IPP Project.

On July 26, 2011, Uduaghan boasted to journalists during a briefing that work on the power project would be completed before he leaves office in May 2015, noting that with the successful completion of the turbines in Europe, work had reached an advanced stage. He added that he was optimistic that the turbines would be shipped into the country by August 2011.

But his promise to complete the project before he leaves office was never fulfilled.
Our reporter gathered that in line with the contract agreement Davnotch Nigeria Limited supplied the two Rolls Royce Gas turbines at the stipulated time, but the turbines were still awaiting installation when the contractor demobilized from site in Oghara, in 2014.

The lPP project was aimed at providing adequate, stable electricity for the people of Oghara, the hometown of Chief James Ibori and other parts of Delta State, however ten years later the project remains uncompleted and abandoned.

Governor Okowa’s government inherits IPP Project in May 2015.

The state Independent Power Project (IPP) was among the many projects inherited by Ifeanyi Okowa, when he assumed office on May 29, 2015. In 2016, to ascertain why the IPP project was abandoned, Okowa set up a 16 – man committee headed by David Edevbie, then commissioner for Finance, to investigate, proffer solutions and advise his administration on what could be done to revive the moribund multi-billion naira project. While inaugurating the committee, Governor Okowa also said his administration would prosecute anyone found culpable considering the huge resources that the project had gulped.

Edevbe’s Committee Swings into Action.

In 2016, Edevbe and members of his committee went on an on the spot assessment tour of the IPP facility. The delegation included the project consultants, A & A Global, officials of Access Bank, the financial advisers on the project, and representatives of the state’s Attorney-General and Commissioner for Justice.

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Since the IPP project remains completely abandoned, frantic efforts was made by this reporter to obtain Edevbe’s panel report but all efforts hit a brick wall. Not deterred Sunreporters wrote a Freedom of Information Act, FOIA, request to the office of the state governor, copying the Chief of State to the Governor, now incidentally occupied by Edevbe and the Honourable Commissioner, Ministry of Power and Energy but there was no response until October 12, 2020, when the newspaper got a letter from the office of the Attorney-General and Commissioner of Justice notifying it that the Delta State Government cannot release such documents under this federal Act and advised it to apply for the information under the Delta State Freedom of Information Act 2019, an advise the newspaper acted upon.

However, Edevbie, who spoke to this reporter on phone, explained that his committee submitted its report in 2017 but refused to disclose the recommendations in the report, stressing that government does not disclose internal reports to journalists.
“The committee report was submitted to the governor, we do not disclose contents of internal reports to reporters,” he stated.

Okowa’s Commissioner for Power and Energy Evades Interview

Okowa’s commissioner for power and energy, Basil Ganagana

Also all attempts made to speak with the state’s Commissioner for Power and Energy, Basil Ganagana, proved abortive as calls, and text messages sent to obtain comments from him on the said project were ignored. Our reporter also visited his office on several occasions, booked appointments through the ministry’s spokesperson but all efforts hit a brick wall.

Sources in the ministry also told our reporter that from 2016 to 2020 it has not made any budgetary provision for the completion of the moribund multi-billion naira project.

Contacted on phone Ovuozorie Macaulay, who was the Commissioner for Energy in 2010, declined to comment saying that the Economic and Financial Crimes Commission, EFCC, is investigating the project. He, however, said that the turbines were ready for installation before he left office as Commissioner.

Governor Okowa & CPS contradict each other.

Contacted to ascertain Okowa’s readiness to complete the abandoned project before the end of his administration, Chief Press Secretary to the Governor, Olisa Ifeajika, expressed his principal’s readiness to complete it before the end of his administration, stating that the project was never abandoned.

“The IPP project was never abandoned by His Excellency. I know it’s one of the projects inherited by this administration, I can tell you no inherited project will be abandoned, we are not known for abandoning projects.”

Ifeajika called for patience with his principal, just as he averred that the governor is taking his time to study the report submitted by the David Edevbe’s committee.

However, Governor Okowa earlier said in 2017 at a town hall meeting at the James Ibori Civic Center, in Oghara, that the Delta State government can no longer continue with the multi-billion IPP project as the project would still gulp over N200 billion.

On the Spot Assessment of Project site by our Reporter.

Entrance Gate of the abandoned IPP project in Oghara

When our reporter arrived the project site at Oghareki-Oghara in Ethiope West local government area, on August 25, 2020, for an on the spot assessment, he observed that the project site gate was locked. The site had a perimeter fence, three uncompleted buildings, a gantry and an access road constructed by Levant Construction Company. Looking at the site, it was obvious that what is on ground does not justify the huge amount expended on the project.

Devoid of human activities, the site was deserted and overtaken by weeds, with grasses as tall as1.2 meters covering the entire landscape. The current surroundings presents a conducive habitat for dangerous reptiles to breed. Also, the 1800 by 600 hectares of land acquired lies waste, a resource that could have served as farms to produce food for the host community. In addition, the access road to the IPP project site awarded to Lervant Construction Company has not been completed.

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Our reporter also visited the rented warehouse where the two gas turbines and other equipment for the project are believed to be kept. The facility was also locked but a community source told this reporter that the turbines, among other machines purchased, are still lying there fallow. He disclosed that in January 2015, fire broke out on a nearby farm which spread due to the harmattan winds burnt the warehouse but he believes the fire did not do damage to the turbines.

Delta IPP projects
Gas Turbines laying fallow waiting installation. Photo by Markson

The community source stated that Oghara, the host community for the abandoned IPP project, currently suffers epileptic power supply, a development that has slowed down business activities in the area. He hinted that part of Edjemuoyavwe community, the host community to Delta State University Teaching Hospital, Oghara, has been in total darkness for over three years, a development that made staff of the institution to relocate to as far as Edo State and other neighboring cities.

A welder, Mr. Esemedafe Oviri, disclosed that his marriage cashed because he could not afford to buy a generator plant to stay in his welding business. He said, since getting electricity in Oghara community has become a mirage, he was no longer able to provide for his wife and two kids.

Also the Oghareki Chief Priest, Prince Scout Akpoteheri Tegbeje, while speaking to our reporter at his residence, disclosed that for over three years, the community has suffered total blackout, noting that the IPP project if functional would have boosted economic activities and improved the standard of living of the people.

Akpoteheri also said the community lacks portable water as there is no electricity to power the community’s water system. Thus, people have resorted to water from River Ethiope to drink, cook and bath, a development that has caused them to continuously suffer from all kinds of water – borne diseases.

Delta IPP projects
Abandoned Ago lane-Oghareki water system occasioned by no electricity to power it.

At the Oghara General Hospital, Oghareki and Ejemuoyavwe Health Center, our reporter observed that the health facilities had no power supply, but staff on duty declined to speak saying they were not authorized to speak to the press.

However one of the health officers lamented that the health center had no running water and electricity two important elements that will enable them function effectively.

Hotelliers and business owners also suffer the same ordeal. One of the hotel managers said they spend between N30,0000 to N40,0000 to buy diesel daily, a situation that has always made them run at a loss.

Another hotelier said he is set to sell off his hotel located at the heart of Oghara because of the huge cost of powering its operations.

In Asaba, capital of Delta State, residents and business owners have also decried the continuous power outage in the capital city.
At Infant Jesus, Anwai , Nnebisi, DLA, DBS and NTA roads in particular they lamented the frequent power blackouts in the capital city, appealing to Governor Okowa to look beyond his personal interests and give Deltans stable power.

Ogbolu Nneka, who owns a provision store along DLA Road lamented that she spends additional money to buy ice blocks to sell her water and drinks, which makes her profit almost zero. She noted that the power outage in the area spanning over four months with unpredictable rationing had crippled many businesses in the capital city while others have resorted to using generators.

She wondered why the Okowa-led government signed an MoU with a private power company to power only government facilities leaving most Deltans to suffer total blackouts.

The situation is, perhaps, worse at Delta Broadcasting Service, DBS road where hotelliers and residents said that the blackout has lasted over nine months because of a faulty transformer feeding that axis of Asaba.

Ifeoma, a fashion designer, said since there was no electricity to iron and sew clothes, her customers have all deserted her, leading to a downturn in her business.

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Our reporter observed that hoteliers along DBS Road have increased their room rates considering the high cost of using generators. A visit to some of the hotels along DBS Road and its environs revealed that the average room which would normally cost N10,000 per night now costs about N15,000 per night, leaving lodgers at the receiving end.

N16B Asaba Integrated Power Project
In an effort to improve the power situation in Asaba, Governor Okowa’s government on August 15, 2016, signed an MOU with Bastanchury Power Solutions Limited, to build the Asaba lntegrated Power Plant expected to generate 8.5 megawatts of electricity at the cost of N16 billion.

Delta IPP projects
Bastanchury Ltd MD/CEO, Mr. Goziem Chidi signing MOU with Delta State Government, represented by Mr. Newworld Safugha.

On March 28, 2017, the governor sent a letter to the State House of Assembly to ratify an earlier approval of the State Executive Council for the building of the Asaba Independent Power Plant Project (AIPPP) by Banstanchury Power under a Power Purchase Agreement (PPA). The project, which is a public/private partnership (PPP) will require the State Government to pay one hundred and N134 million monthly for ten years to Banstanchury Power Limited. The State House of Assembly on March 29, 2017, ratified the agreement and the financial implications for the State over the next ten years.

According to Okowa, the PPA required government to issue an Irrevocable Standard Payment Order (ISPO) in support of monthly power tariff and a related bank guarantee covering the cost of the project as required by Banstanchury Power financiers.

The governor also stated that he approved an additional N30 million monthly gas fuel pass-through charge bringing the total monthly cost to a maximum N164 million.

Government offices, to be covered by the Asaba power plant include New Government House, Old Government House, Felix Ibru Secretariat, House of Assembly Complex, Customary Court of Appeal, Office of Deputy Governor, Office of the Secretary to State Government, Ministry of Works/ Energy and Housing, Cabinet Office, Old Secretariat and Ministry of Information.

Okowa IPP projects
Entrance Asaba IPP

Some of the residential estates/ quarters to be covered include Fine Homes, commissioners Quarters, Permanent Secretaries Quarters, VIPs and New VIP lodges, VIP lodge Annex, House of Assembly Quarters, SSGs residence and others, Chief of Staff’s residence, Deputy Governor’s residence, Chief Justice’s residence and the Presidential lodge.

Investigations as to why the initial IPP project in Oghara remains uncompleted have raised more questions than answers. How come a project that was to cost about 23billion naira in 2011, now requires an additional 200 billion naira to complete? Why has Okowa’s government preferred to initiate another N16 Billion naira IPP project that will only serves some areas in Asaba rather than complete the 116 MW IPP in Oghara?

Interestingly, after the State Assembly ratified the agreement between the State Government and Bastanchury Power in 2017, the then Commissioner for Power and Energy, Newworld Safugha, stated that the project would be completed in 2018.Two years after with N164 million being paid monthly for the said project, it is still not completed.

A visit to the site revealed that the project is still ongoing. An insider in the ministry told our reporter that the project would soon be commissioned for use. However, a top government official who prefers to remain anonymous described the AIPPP as a covert scam being used to settle some persons in the Governor’s kitchen cabinet, adding that irrespective of all the payments being made the project will remain uncompleted.

Delta state gov’t has no investment in N16b Asaba power project, says contractor

CHAIRMAN of Bastanchury Power Solutions Limited, Goziem Chidi has debunked speculations that the Delta State Government has invested huge funds as a contribution in the N16 billion 8.5MW Independent Power Project under construction in Asaba, the state capital.

The chairman has also denied that the state has been paying Bastanchury Power 164 million Naira monthly for the past three years, revealing that the company was not entitled to receiving any money until it had supplied power to the government.
Speaking at the site of the IPP with our reporter, Chidi said allegations that the project was a drain pipe were totally unfounded, pointing out that Bastanchury ought to be commended for initiating and executing the 8.5MW scheme at no cost to the government.
“The real challenge is that our people are convoluted in their understanding of how embedded independent power is funded. This is not a contract. So, no money is paid to a contractor. ASABA IPP is funded through a consortium of financial institutions. The process is transparent and the are internationally recognised standards for sourcing such funds,” he explained.
Chidi revealed that the Power Purchase Agreement (PPA) signed between the Delta State Government and Bastanchury, backed by an Irrevocable Standing Payment Order (ISPO) was the guarantee needed to source for funds, adding that as result, the project has been concluded under the estimated 18 months period.
Rather than condemn the Asaba IPP, or speculate that the project was a drainpipe, the Bastanchury boss said the state, especially, Ifeanyi Arthur Okowa, the state governor should be specially commended for foresight and exceptional courage to see the project to the end at no cost to the government.
“Governor Okowa should be commended for exhibiting foresight and exceptional courage for this project at no cost to the Delta State Government. There are no scams anywhere. Once we takeoff, all our traducers will shut their mouths,” he declared.

 

* This report was done with is support from the John D. and Catherine T. MacArthur Foundation and the International Centre for Investigative Reporting.

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*The report was updated on Friday, January 15 to reflect the viewpoint of   Goziem Chidi, chairman of Bastanchury Power Solutions Limited.

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