Power Sector’s Sundry MoUs
Between 2012 and now, Nigeria has signed a good number of agreements with foreign and local companies to boost electricity generation and supply in the country. Chika Amanze-Nwachuku and Chineme Okafor report that apart from paper signing, there is nothin
In recent times, the federal government has signed various kinds of agreements with foreign and local companies to boost electricity generation and supply in Nigeria. What is worrisome however is that these business agreements have not yielded any result as electricity supply has remained abysmally low. Indeed, industry watchers view these assorted MoUs as mere wishes that cannot be achieved, given that they usually do not exceed paper signing.
Stakeholders in the power sector have expressed worries that the Ministry of Power, has over the years signed all kinds of Memorandums of Understanding (MoUs) with firms purportedly to improve electricity in Nigeria, but these MoUs are never actualised.
“All you see on the pages of newspapers and in the televisions are all sorts of agreements singing, in and out of the country, but you will never hear or see such projects come to fruition. Most of them are signed in the twilight of the administration or when elections draw nearer; once the elections are over, nobody hears about the MoUs again”, said an industry expert. MoUs with General Electric In 2012, the federal government, through the Ministry of Power signed an agreement with General Electric (GE) to build 10,000MW Power Plants in Nigeria.
The then Minister of Power, Prof. Barth Nnaji, who signed the MoU with GE in London, said the agreement was for the construction of series of power plants in the country.
Nnaji said, under the MoU, the GE would become an equity participant.
“In the past, GE only supplied the equipment but now, they will be investing 10 to 15 percent in equity for every single project, the government will match them in such investment while the private sector will bring the balance.”
Nigeria had signed a similar MoU with GE in 2009, but the project was not actualised.
In 2013, GE and Geometric Power, a company owned by Nnaji had signed another agreement to build 450MW Power Plant in Aba. Also in 2013, GE entered agreement with the federal government for construction of $1bn electric manufacturing/assembly plant to service oil and gas and power sectors in Nigeria.
Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, had lauded the project and listed its various benefits to Nigerians.
She said: “In January, 2013, the GE’s Global Chairman, Mr. Jeff Immelt, made a commitment that the firm would invest $1bn in Nigeria over a five-year period. Of this amount, $250m was earmarked for capital expenditure that would make Nigeria a regional hub for manufacturing, service and innovation with an improved ability to support a broader range of project lines in oil and gas exploration and production as well as the power sector.
“The company also pledged to spend an additional $800m in local sourcing of goods and services, labour, staff welfare and training. Now, the pivot of this investment was the plan to build a multi-modal manufacturing and assembly facility in Calabar, Nigeria, which will service the oil and gas as well as the power sectors.”
According to the minister, the GE executive team had promised the facility would create at least 2,300 direct and indirect jobs.
Speaking in the same vein, Global Vice Chairman, GE, Mr. John Rice, said the work by his firm in Calabar would meet the expectation of Nigerian Government and create a model in Nigeria.
He said: “We are proud to be part of this process. For us, this is a critical part of our strategy. We are still an investor and a long term investor and our commitment to follow through on this doesn’t change a bit. We know you will be proud of the work that will be done in Calabar.”
Rice further stated that the GE’s plan was to have the first production of the factory in June or July 2016. It was also not clear if any remarkable progress has been made on the projects. FG, Daewoos’ MoU for 10,000MW Also, in 2012, the federal government, through the Ministry of Power signed MoU with South Korean company, Daewoo Engineering and Construction Company Limited, to facilitate the production of 10,000MW of electricity in Nigeria.
Under the said agreement, Daewoo had undertaken to provide 20 per cent equity in the various projects identified under the scheme, in addition to providing expert advice and guidance on electrical, production and construction of power projects to companies wishing to do business in Nigeria under the agreement.
Nnaji, who also was the minister of power at that time, signed on behalf of the government, while the President and Chief Executive Officer, Daewoo E&C, Mr. Sang-Real Kim, signed on behalf of his company, at an event that took place at the Ministry of Power in Abuja.
“Today is a very important day for the relationship we want to create between ourselves and Daewoo, and the people of Korea,” Nnaji said during the signing ceremony.
He added: “The President was in South Korea and he gave us an opportunity to reach your company and we agreed with your CEO that we would enter into a memorandum of understanding on how to work together and how your company would work with us to improve power supply in Nigeria,” he added.
Nnaji explained that the MoU would change the old system of contractors coming to the country simply to work and get paid, and then go back.
On his part, the Chairman, Daewoo E&C, Chief Joseph Penawou, had expressed delight at entering into the MoU with the federal government, which was the fifth in the series after the launch of the Nigerian power reform road map on August 26, 2012. MoUs with Siemens In April 2012, during a visit to Germany, President Goodluck Jonathan, Nnaji and other high-ranking political and industrial delegation from Nigeria, visited the Siemens gas turbine factory in Berlin. During the visit, the federal government signed an agreement was Siemens to support the financing of power plant projects in Nigeria and for construction of a new service workshop for heavy duty gas turbines in the country as well as support Nigeria with a study on the integration of renewables in the country`s energy mix. Also, Scanpower, a Nigerian company and Siemens signed a technical partnership agreement for the construction of a 1,600 MW gas turbine power station at Lekki in Lagos state.
Nigeria had in 2008, signed an energy partnership with Germany as part of its intervention measures in the power sector. One of the companies to benefit from the partnership deal