Ex-NDPHC Boss: Why NIPP Privatisation Was Not Concluded on Schedule

Debunks claims plants were built without consideration for gas supply

The former Managing Director of the Niger Delta Power Holding Company (NDPHC) Limited, Mr. James Olotu, has provided reasons why the planned privatisation of 10 gas power generation plants built by the company under the National Integrated Power Projects (NIPPs) scheme was not concluded as scheduled in 2014 and even up till now.

Speaking at the weekend in Abuja, Olotu who was the pioneer head of the NDPHC and also superintended the construction of the power plants as well as the processes that could have led to their privatisation before he left office in June 2016, told journalists that three key factors were responsible for the transaction staying inconclusive.

He also described as false repeated claims by some experts that the NIPP generation plants were mostly conceived and built with little or no thoughts for stable gas supply to them, hence their challenges with accessing gas to run.

Olotu explained that the three chief reasons why the NIPP privatisation could not get to the crossing line were because of a sudden rise in the exchange rate between the naira and dollar upon which the transaction was denominated in 2015, issues of insecurity, and an imbalance in the construction statuses of the plants.

He noted that after the NDPHC and its partners in the transaction process concluded the bid phase and winners emerged, they (preferred bidders) were requested to once again conduct due diligences on the plants they won even though they did that at the opening stages of the process.

The winners, he stated, suddenly developed cold feet after they inspected the plants and subsequently discovered some of them were behind in terms of their completion levels and availability of ancillary facilities like gas supply and transmission lines. This, he said left them unsure about the process despite NDPHC’s commitment to them that whatever was left would be completed.

He said in addition to the security concerns raised by the preferred bidders especially of plants that are located in the south were incidences of kidnap were rife then, that investors in a few of the power plants that were ready to be privatised were unable to raise funds to complete the 80 per cent acquisition of the plants following the drastic changes in exchange rates from about N190 to a dollar to over N400 in 2015, when they were eventually called up to make payments.

Olotu, however expressed hopes that the privatisation process would be restarted and concluded soon.

Speaking on assertions that the NIPP plants were built without thinking of how to get enough gas to fire them, Olotu explained: “I told you that the NIPP was a taskforce that was a combination of experts from different agencies relevant to achieving the projects. Since the technology chosen for the generation assets was gas, the GMD of NNPC then was a member of the NIPP steering committee which oversaw what the technical committee did.”

“In the steering committee, we had the ministers of power, petroleum, finance, the GMD of NNPC, Attorney General of the Federation (AGF). It was originally under the minister of power but due to bureaucracy, it was removed and put under the presidency which worked better.

“One of the things we did when NIPP resumed was to identify the projects, the technical committee had people from gas, transmission and generation section and if they don’t say yes to a project location, it will not be taken. We had 53 sites and the committee chose seven sites for the generation assets for the first seven projects. It is therefore not true that NIPP went ahead and located plants without consulting the people from gas. It didn’t happen that way as we were all together. The gas people knew where the gas is,” he added.

He also stated: “However, there are other equations that must balance to have power. If there is gas in a place, we need land around there but if it is marshy, it could cost us three times to build it because the civil works go deep into the ground to take the turbines; so if the land is not suitable, you move away a bit and then do a short distance gas pipeline, same with transmission line, which has to be close to a transmission line too. It is a total equation that must balance and experts have to sit and determine this to achieve the best gain for the project.”