POWER SECTOR’S SUNDRY MOUS
was Siemens, a firm that was suspended and its supply contract cancelled in December 2007 by the federal government for allegedly offering $14m bribe to Nigerian officials.
The projects rehabilitation and implementation, which included for supply of water; problem–solving assistance; and capacity building, had been expected to inject about 6,500MW of electricity into the national grid between 2008 and 2020. US Exim Bank The US Exim Bank had also signed MoU with the federal government to provide $15billion credit to the Nigerian power sector. There were also others signed with Essar of India and Tata of India as well as Manitoba Hydro International of Canada in 2012, which did not see the light of the day. Nuclear Power Plant Also in 2012, precisely in June, Russia was contracted to build Nigeria’s first nuclear power plant (NPP) that was expected to boost power generation in the country.
The contract signed in Moscow, according to power ministry sources would cover the building of nuclear project worth about $4.5 billion. The capacity of the first power generation unit was put at about 1.2 thousand megawatts. It is yet to ascertain whether or not government would proceed with this. Recent MoUs The Ministry of Power had claimed these agreements were signed in its drive to further the frontiers of access to electricity for all Nigerians.
Coming in different shades and by different parties, these memoranda were meant to engineer efficiency in all tiers and varieties of the country’s electricity matrix; gas, hydro, and renewable electricity generation; yet their announced impacts have remained scarce.
It is noteworthy that Nigerians are still awaiting the desired outcome of recent MoU signed in Abuja with Turkish KOZTEK Electric and Energy Technologies to build power generation and transmission infrastructure in Nigeria at the expense of Turkish business interests; the one signed with a consortium of power firms from the United States of America consortium, Team Africa, for the construction of a 400MW power plant in Bayelsa State.
Following the Power Africa initiative, which was inaugurated by American President, Barack Obama, Nigeria and the US also signed another MoU to build a 1,500MW power plant, in addition to the construction of other infrastructure to boost the country’s power sector.
As disclosed at the signing, details of the MoU showed that Global Edison Corporation would tap into the Power Africa scheme to build the 1,500MW power plant and a solar panel company in Anambra State, South East of the country.
“Two MoUs were signed today for Global Edison. For the first MoU, we are building a 1,500MW gas fuelled power station and for the second MoU, we are building a 70MW solar panel manufacturing company in Nigeria, which will be the largest in West Africa,” a representative of Global Edison, Dr. Peter Nwangwu said at the occasion.
Additionally, the government signed another MoU with nine oil companies, for the supply of gas for power generation in the country. The companies: Chevron, Shell Petroleum Development Company (SPDC), Nigeria Petroleum Development Company (NNPC), SEPLAT Petroleum, Agip, Oando, Pan Ocean, Total and Nigeria Gas Company (NGC) were part of that agreement expected to boost gas supply to gas based generation companies in the country. Included in that agreement were electricity distribution and generation companies.
The pool of MoUs in Nigeria’s power sector also included that of a $350 million the government signed with General Electric (GE) and StanbicIBTC Bank to finance the construction of mini power plants in some estates in the country.
At the signing ceremony, which was supervised by Vice President Namadi Sambo at the Presidential Villa in Abuja, government had expressed its appreciation of GE’s support for her electricity reforms.
Specifically, Sambo commended the GE’s CEO, Immelt and other global partners, and insisted that such investment demonstrates the confidence of the international business community the reform programme.
Other signed MoUs yet be actualised included: Global Business Resources USA for the generation of 50MW of electricity in Abuja and Kano; the recently signed 500MW coal-fired power plant in Enugu by One Nation Energy Platform Ltd; the MoU with FirstGate Business Intermediaries Ltd for building of two set 1,000MW gas fired and solar plants, with a project life of 4 – 5 year, and the one with Atlas Petroleum Corporation for construction of 1000MW coal power plant in Enugu.
There is also an MoU amongst several others to boost the electricity evacuation status of the Transmission Company of Nigeria (TCN) to about 10,000MW signed between the government and Liaoning Efacec Electrical Equipment Company China (LEEEC).
LEEEC as contained in the agreement was to finance and execute turnkey Engineer, Procure and Construct (EPC) projects in mobile power generations, mobile substations, E-House package substations and power transmission infrastructures such as High Voltage transmission lines and associated substations.
Similarly, the French government, Electricite de France (EDF) and Enterprise de Transporte et Distribution D’electricity (ETDE), two of France’s biggest firms signed MoU with Nigeria, aimed to galvanise about $200 million or N3.14 billion to upgrade Nigeria’s transmission network. THISDAY however gathered that the deal might have fallen apart on grounds of Nigeria’s lethargic commitment to it. Nebo’s position At a 2014 policy dialogue organised by the Nigeria Development and Finance Forum (NDFF) in New York, Minister of Power, Prof. Chinedu Nebo disclosed to the audience that Nigeria’s power projection for the periods between 2015 and 2017 was underpinned by several MoUs signed by the country with different organisations.
Represented by his aide on change management, Prof. Chidi Onyia, Nebo posited that Nigeria had signed MoU with such entities as ‘Power China’ for the building of 20,000MW capacity thermal power plants and 10,000 kilometres (km) of transmission lines in the country within specified periods that he did not disclose though.
Highlighting some of them and their contents, Nebo insisted that MoUs signed with the likes of General Electric, Siemens AG, Electrobras, Daewoo E&C to facilitate the development, financing, procurement, manufacturer, commissioning and operations of 10,000MW and promote private sector investment in Nigeria’s electricity industry were all underway.
Nebo stated that each of these MoUs present opportunities for new ventures by serious Nigerian-led power development consortiums, considering their deliberate crafting to make significant equity contribution in kind or cash available, as well as provide credibility for Independent Power Producers (IPPs) in the country seeking international financing.
Indeed, as at today, Nigeria’s electricity industry cannot be said to be short of bilateral agreements entered one way or the other in form of memoranda by the federal government with local and foreign.
Industry experts said reforms in the country’s power industry might have opened the opportunity for these for MoUs and other forms of bilateral agreements to push further development in the sector; the skepticism however is on the strength of the numerous MoUs to deliver on their intents, which sometimes appear quite excessive.
MoUs are occasionally general, concise or long-winded and extremely detailed in character, and are commonly used to express mutual accord on an issue between two or more parties.
No matter their content, MoUs specify mutually-accepted expectations between two or more people or organisations as they work together toward a common objective. They are generally recognised as binding, even if no legal claim could be based on the rights and obligations laid down in them.
Tenets applied in drawing up MoUs, which are also known as letter of intent, specify that to be legally operative, a memorandum of understanding must amongst other objectives: identify the contracting parties, spell out the subject matter of the agreement and its objectives, summarise the essential terms of the agreement, and more importantly must be signed by the contracting parties. Streamlining the MoUs The ministry of power has maintained that some of the agreements signed on renewable electricity and coal to power are beginning to yield some results.
Nebo’s senior aide on communication, Kande Daniel explained that records of progress made with MoUs on coal to power, solar and wind energy generation are encouraging. Daniel however noted that in line with its mandate, the ministry subjects each MoU it signs to good faith, relevancy and level of commitment from parties before accepting to it.
“The statuses of these MoUs are not ambiguous, Nigerians deserve to know how they have fared and the ministry of power is always open to share such information with the general public.
I can also say that agreements signed on several renewable power projects have taken off, we have promoters of coal to power also signing MoUs and mobilising to sites, these are encouraging news,” Daniel said.
In his assessment however, global energy expert, Mr. Dan Kunle stated that the bank of MoUs in the sector suggests that due diligence on their viability and relevance did not take place before they were signed and announced.
He noted that it was time Nigeria streamlined her intention and make it clear to parties before entering into any bilateral agreement in her electricity industry.
Kunle who was part of the team that developed the feasibility studies for the proposed $200 million EDF/ETDE transmission upgrade project, said that a country with an infant electricity industry like Nigeria should at all times transparently narrow down seeming bureaucracies often associated with signing of MoUs.
“It is a serious issue and I find it very difficult to really understand the content of all the MoUs that we have in the power sector today.
As a country with an infant electricity industry and want investors to come in, we must put out the content of our plan to willing investors with the view to pursue and get credit or contract financing from across the world,” Kunle said.
He added: MoU is not a contract but every day we sign MoUs in the power sector. How many of the MoUs have translated into what they promised, how many of them have brought the needed finance on the table?”