How General Electric, other Electricity Contractors are Killing Nigeria — CEHEJ, Dr Oke

Patience Ogbo/

A new report by the Centre for Health Equity and Justice (CEHEJ) has revealed how a globally acclaimed electricity industry giant – General Electric (GE) with long term presence in Nigeria and other electricity contractors under-performed and failed in their contractual obligations to Nigeria in the sector.

According to the report which carefully reviewed numerous electricity contracts awarded by the Nigerian government “General Electric did not give anything back to Nigeria in exchange for the billions of dollars it has taken out of the country, but GE and other failed contractors have offered the government and people of Nigeria general darkness”.

The 70-page report launched Friday at the IBIS Hotels, Lagos is titled: “Kept in Darkness”—Holding Non-Performing Electricity Contractors Accountable.

The report was presented to the media by Dr Yemi Oke, Ass. Professor, Energy/Electricity Law, Faculty of Law, University of Lagos. He disclosed that “in the course of the investigations culminating in this report, it was discovered that some of the contracts awarded were for purposes or projects that were not feasible, while others although feasible, were awarded to fictitious, non-functional or non-existent companies which are in other words referred to as shell companies in that they exist only on paper.

“Of graver worry is the fact that most of the projects for which the contracts were awarded, up until now, remain unattended to, either totally unattended or inexplicably abandoned half-way. The report found that the billions of dollars spent by the Nigerian Government in the power sector have been paid to contractors, most of whom failed to deliver on their projects and promises to Nigeria. GE, as a so-called development partner of Nigeria, has collected more money from Nigeria, more than any other entity and has disappointed the most”.

‘Kaduna Power Plant contract was awarded since 2009 as a turnkey project with a term of 36 months, it has not been delivered till date, i.e. after over 10 years. Worse still, on average each engineer of GE on the project site gulps from the Nigerian Government purse a daily sum in US dollars that is way higher than the monthly salary of a permanent secretary in the Government Ministries. ‘

In x-raying the Kaduna Power Plant that was awarded to GE as a contractor in consortium with an indigenous company, the report reveals how GE has been very deliberate and systematic in disappointing Nigeria’s legitimate expectations in salvaging the power sector despite claiming to be Nigeria’s strategic development partner.

The report shows that although the Kaduna Power Plant contract was awarded since 2009 as a turnkey project with a term of 36 months, it has not been delivered till date, i.e. after over 10 years. Worse still, on average each engineer of GE on the project site gulps from the Nigerian Government purse a daily sum in US dollars that is way higher than the monthly salary of a permanent secretary in the Government Ministries. The report is convinced that no foreign entity has caused such financial haemorrhage on Nigeria as GE has done.

The report seeks to ensure that those who failed to perform or deliver on contractual obligations, duties and responsibilities in the power sector are held accountable and punished under the existing law; contractual agreements, and document.  It reports specific scandals and waste of taxpayers’ money in the area of power sector contracts corporations by the Nigerian government.

The report launch was also attended by the representatives of the office of the Attorney General of the Federation, the Director, Head of FOI, Federal Ministry of Justice (Abuja), Mr. Ichibor Gowon; the National Coordinator of Open Government Partnership in Nigeria, Mr Benjamin Okolo; Representatives of the Special Assistant to the President Justice Reform, Mrs Juliet Ibekaku-Nwagwu,  and Mr Ibrahim Magu Chairman Economic and Financial Crimes Commission (EFCC) who was represented by Mr Osita Nwajah, Director Public Affairs EFCC, as well as representatives of the Independent and Corrupt Practices Commission.

They promised to work to ensure the full implementation of the recommendations contained in the report. Others at the events are Barrister Abiodun Ajayi; Olanrewaju Suraju, Executive Director, Civil Society Network Against Corruption (CSNAC); Olusegun Elemo, Executive Director Paradigm Leadership Support Initiatives (PLSI); the International President of the African Women Lawyers’ Association (AWLA); representatives of the Independent Corrupt Practices and other Related Offences Commission (ICPC); and the media. The report recalls that earlier in May 2008 in its report, the House of Representatives Committee on Power and Steel in its report of investigation into the huge sums of money spent on power generation, transmission and distribution between 1999 and May 2007 without commensurate result had earlier indicted some of the contractors and recommended that they be further investigated by EFCC and ICPC with a view to recovering huge sums fraudulently received on power project contracts.

Some of the Contractors indicted are: Marubeni (WA) and Marubeni international for very poor performance in respect of LOT 1 (Calabar), LOT 4 (Sapele), and LOT 5 (Eyaen/Ihovor) power stations projects. Lahmeyer International for generalized project management failure in respect of the NIPP project, complicity in tender manipulation, negligence or complicity in over-scoping as well as overpricing of NIPP projects, abuse of due process, certification of invoices for payments for woks not yet done by contractors (e. g Marubeni). Cartlark International for complicity in the over-scoping of NIPP LOT 4 Transmission project and acquiescence in accepting payments totalling over =N=4billion. KEC/News Engineering for non-performance and lack of diligent prosecution of contract for Gombe – Damaturu – Maiduguri 330Kv Transmission Line project. Hoquado received contract payment sums in excess of $10 million since March 2006 and refused to carry out its contract on the excuse that the community landowners claimed compensation of N18 million when interest is earned on the $10 million it received would be about $2 million (240 million)Charnel Engineering for non-performance on NIPP LOT 10 and LOT 11 transmission contracts, and in respect of PHCN Maiduguri 330/132KV substation.

Oke stated that “of the reported or documented cases of under-performing contracts awarded by the Federal Government of Nigeria in the power sector, those awarded to the contractors General Electric (GE and Rockson) with the Client (Federal Ministry of Power) for the 215MW Kaduna Power Plant appear most suspicious, shoddy, and reckless”.

The report notes that “the study pays particular attention to the GE/ROCKSON 215MW Kaduna power plant project due to its importance, net potentials to the Nigerian power sector as well as the level of corruption and reckless connivance leading to huge economic losses to Nigeria and its citizens.”

 The report says: “This contract represents a typical case of uniqueness in power sector corruption through the award of contract, as further outlined by the curious dimension of the contract in the absence of a termination clause in the contract. This is particularly significant in view of the fact that the contract does not provide for what the Federal Ministry of Power could do in the event of failure by the Contractor as has happened in this project.

“The report is curious that the project has no provision for a mandatory take over and completion of the work. By the nature and structure of the contract, an impression has been created that GE simply used the contract as a scheme to dump equipment on the Government of Nigeria and disappear.”

The report further says that “as structured and executed, the contract is a complete and total negation of the commitment of GE to develop the power sector of Nigeria. GE did not give back anything to Nigeria in exchange for the billions of dollars it has taken out of the country”. 

Dr Oke further observed that “10 years post contract, the Kaduna Power Plant project has continued buffering, tethering and staggering. The project is not completed. The project is not near completion. Out of the 215 MW promised to be delivered from the Plant, not a KW has been delivered. More worrisome, the Federal Government has parted with tens of billions of naira on the project. It remains inexplicable that a 36-month project has lingered to date (about 10 years) and, most astonishing is the facts that GE has since collected its full payments on the contract. 

“Although the project was right as conceived, its tender procedure was shrouded in secrecy. The contracting was not only bad but also convoluted and fraudulent as performed. This is because implementation has been far from reasonable and the result abysmally disappointing. This is equally despite the assurances GE gave to the Government of Nigeria to utilize its leadership position to ensure that the KPP was executed to international standards both in terms of time, quality and output. Considering the Electric Tariff of 40.0 [NGN/kWh], the revenues that the Kaduna Power Plant would have eventually generated in One Year of production, are:920,588,400 [kWh/y] * 40.0 [NGN/kWh] = N36,823,536,000.00[NGN/y] Considering finally a period of 6 years of “Loss of Revenues”, the total amount lost becomes: N220,941,216,000.00… in comparison, Siemens delivered the Geregu Power Plant of a bigger capacity in less than 24 months.

“The way the project has been poorly executed and unreasonably delayed suggests that GE knew from the outset that the project would be a flop or poorly performed, hence introduced the ‘several liability clause’ to shield itself from blame despite that it induced the award of the project by its involvement and representations to the FGN.

“GE sold all the gas turbines (frame 9) to NIPP for the medium-sized power plants, even when they knew that sites for the erection of the equipment were not available, the manufactured turbines were then quickly shipped to Nigeria and left at the ports, so much demurrage was incurred due to long term storage at the ports and the equipment suffered serious damages which GE had to replace at exorbitant monopolist prices. For instance, at one plant alone (Calabar Power Plant) $8million was paid for third party preservation of the equipment, after that another $5.4million was paid to GE to replace parts for the same stored equipment since GE declared them as unfit for use, the oils and batteries expired in storage.

“The same situation is applicable to the various plants under the NIPP project including Calabar, Ihovbor, Sapele, Gbarain, Egbema, Omoku, and Alaoji power plants. From 2003 to date there is over 2000MW of stranded uninstalled and non-commissioned turbines capacity; the turbines have been supplied by GE and full payments made but the nation still suffers because of the connivance of GE with the EPC Contractors to rip off the country. The FG had to pay several millions of dollars to other companies to handle preservation of the turbines at the ports because GE practically dumped the equipment on Nigeria.” 

Dr Oke reiterated that GE has brought general darkness to Nigeria and should like all other failed contractors be held accountable.

The report finally recommends to the Federal Government, the EFCC, and the ICPC to bring to book those found wanting in the failed projects.

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