Nigeria’s power sector roadmap, a comprehensive plan to ensure adequacy of electricity supply in the country recently unveiled by President Goodluck Jonathan, has come under a major threat, THISDAY investigation has revealed.
An unnamed petitioner is said to have pointed out irregularities in the gas contract award for the 1,074 megawatts Alaoji Power Station, the biggest of the country’s gas fired power plant under the National Integrated Power Project (NIPP) which is expected to contribute significantly to the roadmap.
The contract for the supply of gas to the power station was tagged “emergency” to avoid the scrutiny of the Bureau of Public Procurement (BPP) and allegedly awarded under questionable circumstances to a contractor with no track record of building gas pipeline.
The scope of the project includes construction of 18-inch x 2.5kilometre gas pipeline system with associated facilities from intermediate pigging station to Alaoji metering station; construction of 18-inch x 1.2kilometre gas pipeline system with associated facilities from Shell Petroleum Development Company (SPDC) Imo River station to Nigerian Gas Company (NGC), Owaza Compressor Station; and Hot Tap existing Imo River-Aba gas pipeline and SPDC Imo River flow station tie in points.
It also includes testing and commissioning the early gas supply system; relocation of 30 million standard cubic feet per day capacity early gas delivery facility from Omotosho to Alaoji Metering Station site; review of an existing design already carried out and procurement, supply and transportation to site, all materials and equipment for the construction, testing and commissioning of the pipeline system.
However, all the materials, including line pipes are already procured by the NGC, a subsidiary of the Nigerian National Petroleum Corporation (NNPC), and are to be issued free to the contractor.
A source at the NNPC, who was aware of the deal, told THISDAY at the weekend that a top Group Executive Director (GED) of the corporation had deceived the NNPC Group Executive Council (GEC) to invite a sole bidder for the project instead of calling for an open bid from qualified indigenous contractors, thereby subverting public procurement process.
The GED, according to the source, also allegedly misinformed the NNPC GEC to approve the contract for the sole bidder at its meeting of June 18, 2010, at the cost of $8.4 million, with a provisional sum of $807,102.71 plus N5 million.
It was alleged that this cost, which covers only construction and commissioning, was fraudulent as the total project, including detailed engineering design and supply of the line pipes and metering station, was initially meant to cost $30 million, while construction and commissioning was meant to cost about $4 million.
“How come this project is awarded at $8,400,000.00 for only construction and commissioning, when all the materials are to be supplied by the NGC?” queried an NNPC source, who was familiar with the deal.
The contract, it was alleged, did not pass through due process as the top GED was said to have tagged it “emergency gas supply to PHCN power plant at Alaoji”, to ensure that it was not subjected to due process.
Director-General of BPP, Mr. Emeka Eze confirmed to THISDAY that the contract was not in the data base of the agency, which was a contravention of relevant regulations that stipulate that any contract that is up to N1 billion must pass through BPP for due process certificate.
“Any contract that is up to N1 billion is supposed to pass through us. But this one did not pass through us; it is not in our data base. So, I would not know if the contract has been awarded,” he said.
On the alleged use of the word “emergency” to subvert due process, Eze expressed doubts if the project qualifies for emergency.
“It is actually in the case of emergency that someone can award contract before coming to us for due process certificate. For instance, if a bridge collapses or heavy rainfall cuts a road into two, you can find someone to fix it quickly and later come for due process certificate. But I don’t think what they have done qualifies for emergency,” he added.
It was also alleged that the contractor has no track record of building gas pipeline as the current project it is handling for an unnamed oil company is crude oil pipeline and not gas pipeline – which requires a different technology.
According to investigation, the NGC on a routine check with the oil company got a damming report on how the contractor had delayed the execution of the crude oil pipeline project, but the top GED at NNPC, who was bent on awarding the NGC’s gas pipeline contract to the same contractor, directed the NGC to “step it down” – that is, to bury its findings.
It is feared that the Alaoji gas pipeline contract, which is expected to be completed within three months, is a clear attempt to derail President Jonathan’s efforts to improve power supply as it will be delayed the same way as the crude oil pipeline contract being executed by the same contractor.
“The only reason the contractor was singled out for an arranged contract award is to ensure that there is no completion that will bring value to NNPC,” an insider said.
“It is wrong to ask for only one contractor to submit a bid of this type. It would have taken the same time to evaluate bids of three contractors that are known to NGC to be fully qualified for this scope of work. NGC has a data base of good contractors to get the best value for their money. There are clearly more qualified indigenous contractors that are available and if included, would have brought the required competition and value to NNPC,” he added.
Chairman of the Presidential Task Force on Power (PTFP), Professor Barth Nnaji however told THISDAY that his task force does not get involved in such contracts.
“Believe me, I don’t know anything about the contract. We leave the award of such contracts to the NNPC and we expect them to do proper due diligence. It is only when there is problem that we begin to look into such contracts,” he said.
Nnaji further disclosed that the first phase of Alaoji Power Station would come on stream by the first quarter of 2011.
Another NNPC source, who called for the re-award of the contract to a competent contractor, argued that the project is technically flawed, stressing that planning an 18-inch gas supply to come off from a 12-inch Imo River-Aba gas pipeline does not make technical sense.
“An 18-inch line is being built to take gas from the existing 12-inch line. The 12-inch line is a Low Pressure (LP) line built in the 1960s to deliver gas to Aba industries – Aba Textile Mills; Nigerian Breweries; and International Equitable Industries. This line is an LP and is very old with suspect integrity. The power station requires higher pressure to operate and the quantity of gas from the old line will not suffice for this requirement,” the official said.
Meanwhile, the NNPC has stated that due process was undertaken in the award of the pipeline power plant contract.
Group General Manager, Group Public Affairs Division of the Corporation, Dr. Levi Ajuonuma, alleged that contrary to an anonymous petition being circulated to media houses by a disgruntled contractor, the management of the corporation took all relevant measures in ensuring that transparency ensued all through the award process.
He said the contract was revoked after the said contractor failed to deliver on the project six years after the award.
"It is common knowledge that the administration of President Goodluck Ebele Jonathan attaches huge importance to the issue of power supply to Nigerians. Thus after waiting in vain for six years for the contractor to perform, NNPC Acting on the instruction of the Presidential Committee on Power Chaired by the Vice President Alhaji Namadi Sambo, was mandated to re-award the contract to a competent contractor under a matter of urgent national importance to a competent contractor that can deliver on time. So tell me what is wrong with that?" Ajuonuma said.
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