After over one hour of debate on ways and means to improve the near moribund power sector, the upper chamber resolved to ask President Muhammadu Buhari to appoint a separate power minister with further delay.
The Senate insisted that the appointment of a separate power minister would ensure concentration in the power sector.
Senator Francis Alimikhena (Edo North) who moved the motion for the appointment of a separate minister of power, posited that such a measure would assist the country to shore up the power sector.
The senate resolution followed the adoption of a motion on “The need to establish and delegate Special Purpose Vehicles to execute and operate Major Power Sector Development Projects,” sponsored by Senator Mustapha Bukar (Katsina North)
Senator Bukar in his lead debate said that the National Assembly enacted the Electric Power Sector Reform (EPSR) Act, 2005 on March 11, 2005, which kick-started the process of privatization of the Nigerian Electricity Supply Industry (NESI) towards developing a Competitive Electricity Market with the establishment of the Nigerian Electricity Regulatory Commission (NERC) to provide for the licensing and regulation of the entire value chain of the Nigerian Electricity Market (NEM)
He also noted that the privatization exercise became effective on November 1, 2013 when the unbundled Power Holding Company of Nigeria (PHCN) was sold and transferred to successful bidders of the 6 Generation Companies (GENCOs) and the 11 Distribution Companies (DISCOs), while the ownership and control of the Transmission Company of Nigeria (TCN) was retained by the Federal Government for strategic reasons.
He said “Further notes that in its quest to bridge the power gap for sustained economic growth in Nigeria by adding significant new generation capacity to Nigeria’s electricity supply system, the Federal Government conceived the National Integrated Power Project (NIPP) in 2004, which metamorphosed into Niger Delta Power Holding Company Limited (NDPHC) incorporated in 2005.
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“Aware that this institution oversees Generation portfolio consisting of 10 gas-fired power plants with cumulative design capacity of 4,774 MW; Total Asset value of $8.5 Bn including generation projects accompanied by supporting transmission, distribution and gas infrastructure projects and due to gas supply shortage and uncompleted transmission projects, only about 1,200 MW was accessible to the national grid at that time.
“Consequently upon the commencement of the privatization and establishment of the Nigerian Electricity Market, the role of the Federal Ministry of Power, Works & Housing (FMPW&H) was restricted to Policy and oversight of the autonomous agencies operating in the Nigerian Power Sector; these are the:
Transmission Company of Nigeria; National Power Training Institute of Nigeria; Nigerian Electricity Liability Management Limited (NELMCO); Nigerian Electricity Management Services Agency (NEMSA), Rural Electrification Agency
“Notes that considering the need for continuous development of the Power Sector infrastructure, the Federal Government remains committed to developing project initiatives in order to increase generating capacity and diffuse the energy mix beyond thermal generation to renewable energy, such as hydro-power, solar power and wind energy.
Consequently, certain project initiatives were retained for direct supervision by the Federal Ministry of Power. These included, but are not limited to:
3,050 MW Mambilla Hydropower project; 700 MW Zungeru Hydropower project, 215 MW Kaduna Thermal Power project; 50 MW Katsina Wind Power project
“Further Notes that annually significant and incremental sums are appropriated towards these projects and the National Assembly has been approving such appropriation in the interest of conceived intention to improved generation capacity to the Nigerian citizens;
“Worried that there are challenges of managing such projects because the Federal Ministry of Power, as currently constituted, does not have the required professional competence and resources to effectively execute these projects, hence they resort to engaging contractors and consultants for every project development activity;
“Also worried that the implementation of large scale projects is always fraught with the risk of cost and schedule overrun, with attendant consequences on overall contract sum;
“Notes that turnkey Engineering, Procurement & Construction (EPC) projects have FIDIC Conditions of Contract being applicable with strict provisions for liquidated damages, such as fixed contract sum and set delivery period. Unfortunately, these conditions of contract cannot be met under the setting of a ministry;
“Further notes that necessary project management controls needed for effective delivery are not enforceable on the Federal Ministry of Power; these are:
Cost Control, Schedule Control, Quality Assurance (Q-plan, Q-criteria, etc.), Procurement Control (personnel, inspection and expedition), Design Control (Design compliance and value engineering), Change Order Control (Management of scope variations); Document Control (Review & timely approval of designs).
“Worried that with the engagement of multitudes of consultants, there is a risk of lack of ownership and knowledge transfer upon completion and commissioning of the projects, which would hamper proper management of the facilities when in operation. This is the current situation being experienced at the 215 MW Kaduna Power plant under construction by the Ministry;
“Aware that Nigeria has had successful record of implementing several mega infrastructure projects to completion and it is imperative to draw on such models utilized for refineries, fertilizer plants and steel mills (Kaduna and Port Harcourt Refineries, National Fertilizer Company of Nigeria Plc (NAFCON), Delta Steel Company Limited and the 3 Inland Rolling Mills). Each of these Special Purpose Vehicles (SPVs) had full management team and foundation staff to manage the execution of the project on site. Upon completion, the Project Managers were appointed as the Managing Directors, while full-stream staff members were recruited prior to commissioning the projects;
“Further aware that when the Federal Government was keen to build Gas based power plants, it created the Niger Delta Power Holding Company of Nigeria (NDPHC) to build, manage and operate these schemes. Although some of the power generating plants have been sold, NDPHC has continued to own and run these plants while the Government is preparing to sell the remaining plants;
“Worried that with the privatization of the power sector, the Federal Ministry of Power, Works & Housing is rapidly expanding its project implementation activities rather than limit its role to General Policy direction pursuant to Section 33 of the EPSR Act 2005.
This attitude has not given the regulatory body, Nigerian Electricity Regulatory Commission (NERC) and other agencies created by the Reform Act the enabling environment to develop their capacity to regulate and create the electricity market required to attract investment in the sector. This assertion is evidenced by the fact that over N100billion has been provided for the construction of power projects by the ministry under the 2017 budget. Recently, the Federal government announced the approval of over $5billion for the construction of the Mambila hydro project under the ministry.”
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The Katsina State lawmaker prayed the Senate to accordingly resolve to urge the Federal Government to immediately incorporate SPVs for the implementation of the following alternative energy projects:a. Hydropower Projects; b. Solar Power Projects; and c. Wind Power Projects;
Urge the Federal Ministry of Power, Works and Housing to use gas as the source of Energy for the Kaduna Project in accordance with the original project concept and the MOU signed with gas suppliers to complete the project as adequate provision has been made for the project in the 2017 Budget;
Urge the Federal Government to employ qualified management team to take charge of the project development in the SPVs and gradually resource the companies in readiness for full operations when the projects are commissioned;
Urge the Federal Government to transfer all generation, transmission and rural electrification projects to the respective agencies for proper administration;
Urge the above-named SPV’s when created to comply with the provisions of the Electric Power Sector Reform (EPSR) Act by applying to NERC for the generation licenses and to the TCN for Grid inter-connection approval.
All the prayers were adopted.
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