OLOTU: HOW WE GOT STATES, LGS SUPPORT FOR NIPPS

You also attempted to privatise these plants, how did you come up with the idea?

We took the 10 power plants to the open market because the idea was that we wanted to privatise them. And, the reason for wanting to privatise them was not because Nigerians are incapable of running them. It was because we wanted the private sector to run them - NDPHC operates as a private firm, although the shareholding is by government. But we wanted to hand over the plants completely to the private sector for efficiency and effectiveness. Secondly, we wanted the private sector to provide the money that we used for the plant construction and use this money for the second phase of the NIPP which was already approved during the last regime. And the second phase of the NIPP involved Mambila, Gurara and several other hydro power plants, which all together were about 15 in number. The idea also included investing in some solar architecture, so, we thought of moving into solar, hydro and coal, and the money we plan to use for these projects would have come from the sale of the 10 initial plants.

So, we then put 80 per cent of the shares of those 10 plants in the market, finished and at the end of the transaction, we were able to rake in $5.7 billion for 80 per cent shares in those 10 power plants, finished and unfinished. For the unfinished ones, we agreed that we will finish them before we collect the money from the bidders, they can give us some assurance by paying certain percentage so that when we finish we hand over to them.

Now, don’t forget we spent $4.4 billion for that and got $5.7 billion. Also, don’t forget that I said it was 80 per cent. So, really if it was 100 per cent, which is what the bidders wanted, it will be $7.1 billion, and that is for only generation. Therefore we invested $4.4 billion and got $7.1 billion.

And for the transmission projects we are supposed to hand over to the TCN, which will then boost their capacity from taking like 5,000MW to taking about 7,000MW when our infrastructure is added to theirs. And, we need to get our money from them, which actually is the money of the three tiers of government who are the investors and they want to see their money growing. For distribution and gas, they will sit with us and agree that they will pay back the money in 10 years, which is the value of the assets in 10 years.

For transmission, we will give it to them at the value but what was the value. We’ve seen the value for generation assets. For the value, we told them to take these assets at the contract prices that we awarded them, plus maybe 10 per cent administrative charges. For the gas projects, by the time we finished the valuation, which was actually done by an expert, the result was much higher.

We had to hold back our contract prices since they claimed that it was fraudulent. So, we told them to come and pay whatever the value from their valuation results were, and if the value is less than what we spent in building it, you can now say we padded. But if the value was more than what we spent in building it, then we are making a profit. So, that is what happened for gas, but people in distribution ran away. They now said they will prefer to take the assets at our contract prices. Transmission also came to tell us that they will take the assets at the contract prices.

So, what went wrong with the privatisation efforts? You see when we were going into the projects, we went with everybody – the National Assembly, Ministry of Power, Ministry of Petroleum Resources, Nigerian Gas Company, PHCN, Nigerian Electricity Regulatory Commission, NBET, Market Operator, and everybody went with us. We are just the builders of the power plants.

The power plants on their own will not work so, we needed somebody from transmission to say yes, it will work because we have a line that will take this power. We needed somebody from gas to come and say yes that power plant has a gas, the gas that is required in the quantum that is required to fire it.

Because what are the investors buying, they are not interested whether the power plants are brand new but that they have the ability to generate money for them over a period of time to recover their investments.

So, as soon as we finished the privatisation, the bidding, the due process and everything, we now told the bidders do a second round of due so that you are sure and they went. First, they started having complaints, that transmission

Commentators have repeatedly said you built the power plants in areas that have no gas supplies, and that they were politically influenced, is this true? NIPP was a combination of experts from different organisations relevant to execute the project. Now for petroleum, because the technology chosen for NIPP was gas, therefore the Group Managing Director of NNPC then was a member of the steering committee of the NIPP. You have the technical committee, you have the steering committee. The steering committee oversaw what the technical committee was doing.

In the steering committee you have the Minister of Finance, the Minister of Petroleum is there, and the GMD Petroleum is there.

The Attorney General of the Federation is there. The technical committee was made up of people, these people nominated from their various offices to be there. For identification of the projects, the gas people were there. The transmission people were there. The generation people were there. If these three people don’t say yes to a project location it will not be located.