Olotu: How We Got States, LGs Support for NIPPs

Mr. James Olotu, was the pioneer head of Niger Delta Power Holding Ltd, which built, operates and maintains the 10 National Integrated Power Plants. He spoke to Chineme Okafor on how the NIPPs were saved from falling apart. Excerpts:

You’ve been out of office for about a year now sir, what have you been doing? I left office suddenly, and one thing that happened to me when I left office was that I had time for myself. While in office, the volume of work that my office entailed, the kind of people that office need to interact with, the volume of stakeholders that you have to manage to achieve the results that we achieved were such that family was not one of the greatest commitments and secondly one didn’t have time for oneself.

So, the first thing I did was to enjoy sleep which I never had enough, I ate regularly, and I wanted to make sure I stayed at home with my family for a long time. But you know as a very active mind, after a few months of doing that, I became restless and joined an organisation called Skipper Seil, which is a group of companies based in India and Dubai, and involved in power business in Nigeria as well.

But, somehow I left and recently decided to set up a new outfit with some of the best brains in Nigeria’s power sector and very soon we will have Innovest Nigeria Solution Limited come up to provide solutions to Nigeria’s issues. It is going to be a limited liability company and I will be its chairman. We will blaze the trail when it comes up it will begin to provide solutions to problems.

What will be the competence of Innovest in Nigeria’s power sector? Innovest is not just about Nigeria’s power sector even though power is one its fundamentals, but it is about power and defining solutions to using the most modern solutions for deploying power solutions to Nigeria within a short time and they may be solar, wind, biomass and ethanol.

What is going to be the capital base of Innovest for it to take up such innovative market? Innovest don’t necessarily need a lot of financial capital base but we need the brain. For instance a state government has invited us to be part of the work they are doing in power, airline, pharmaceutical, tire manufacturing, deep seaport and fertiliser.

The NIPPs which you were part of from inception stopped at a point, and then restarted, what happened and how did you get this through? I wasn’t the one that started the NIPP, it was a baby of the three tiers of government with Chief Obasanjo as the lead. The minister of power then, Liyel Imoke, was operationally the technical support and NIPP was a bunch of people that were gathered together with different skillset to become like a taskforce and it was when I got in there that the idea of turning it into a company came to the fore and the reason was that NIPP could not award a contract as a taskforce and you are dealing with billions of dollars of projects and there was no way you can sign a contract when you are not a company.

So, the first thing I did was to make sure we were registered as a company, and then to take an inventory of what had happened before I came in and there was no office and my car was actually my office. NIPP was a very diverse programme and at a time we had about 1700 different projects taking place at the same time across the power sector value chain.

Then the National Assembly and a committee of the Fiscal Revenue Mobilisation Commission were the ones who raised the issues about the way NIPP was formed and that they were using the Excess Crude Account (ECA) to fund it. Those issues were serious enough for it to stop so we looked at the issues they raised and found that many of them were valid issues.

We met with the leadership on it to mobilise the state and local governments to join the federal government in the project as their money was involved and it was done. All the state govern- ments raised bills at their House of Assemblies and the federal government also raised a bill to the National Assembly which was passed and they became law. From these, everybody came on board and they now decided to give more money. Originally, the NIPP was six power plants and about 30 transmission projects before it was expanded. We now realised that if we built these power plants, how will electricity get to our houses if we don’t build distribution and gas infrastructures. So, we solved that problem by expanding it to include the value chain, and so we involved all the sectors.

But financial commitments had been made before it was stalled? Before the projects were stalled, they had already spent $2.8 billion and those who were trying to stop it did not understand. The contracts that were signed at that time were more than $6 billion but we had already put in $2.8 billion. As at the time they were investigating what had been spent in the power sector then, and everyone was talking about $16 billion, the actual money spent was $3 billion in the entire sector. The Accountant General of the Federation said it did not release any money, the CBN said it did not release any such money but the press was not well informed.

If you stall the project at that time, it meant the $2.8 billion spent as collateralised advanced payment guarantees, international and performance bonds will have been lost and those contractors could go to court and whatever was their perceived expectation of profit if the projects were finally completed, you will pay them. So, we decided that we should also challenge that area, we met with a lot of people and educated them until we finally convinced them that they were not wrong but that they were not well informed.

The power sector is a special kind of sector unlike in the works sector. If a contractor is asked to build a 100 kilometres road and he does 50 kilometres you will see it, but you won’t see anything in power until it is completed. You can only see machines that are not doing anything until the last bolt is tightened.

What was the status of the projects when you left the NDPHC? By the time I left, generally the projects were like 85 per cent completed. Amongst the power stations, six of them were completed and were already delivering power to the grid. One was half completed, which is a hybrid power plant – the Alaoji power plant, where we commissioned the first phase, which is the single circuit. The second which is the steam turbine was not completed. So, that is why we say it was half completed.

So, these are the projects we handed over and by the time I was leaving, the transmission projects were like 90 per cent completed. We added more distribution projects and they were about 350 before I left, we had about 165 of them before. And by the time I was leaving the distribution projects were about 85 per cent completed. The generation projects were like 80 per cent completed in general terms, because six and half of the generation projects were completed, while the remaining three and half were about 80, 70, and 50 per cent completed.

Now the challenge is that all the contractors were not procured by us. They were procured before my team came in. So, we inherited people who ordinarily were not the best of contractors to handle the projects. The second challenge was that we had some contractors who got more projects, although they also bid for the projects. The reason was that most of the credible contractors didn’t bother to apply due to skepticism which they had about the Nigerian company calling for the multi-billion naira projects. You may know one of the contractors who had about five projects, which are the biggest projects, is the same contractor that is keeping the last three projects that have not been completed. Of course, you have violence in some areas.

Also in certain areas of the country, the rains were higher than what you get in other locations. So, in those areas where there is so much rain, during heavy rainfall periods, projects are not fast, especially when it has to do with the foundations.