• Declares: I’m confident we’ll meet President’s 10,000MW target
THE Minister of Power, Works and Housing, Mr. Babatunde Fashola SAN, has shown sign of capacity building for improved electricity supply in the country. This emerged after he presided at the historic signing of agreements between the Enugu Electricity Distribution Company (EEDC) and Aba Power Limited to end a three – year dispute that had stalled the completion of a 141 MW Power Project for the area.
Speaking after witnessing the signing of the agreements between Aba Power Limited and Enugu Electricity Distribution Company Plc and Interstate Electricity Limited on the other, Fashola expressed confidence that the temporary energy crisis facing the country will be overcome and the target of 10,000MW set by President Muhammadu Buhari will be met.
While making an appeal that everybody must contribute to solve the problem rather than being a part of the problem, the Minister said with such landmark resolution of a three-year old dispute that had stalled the completion of a critical power project in the South East and the recovery of four turbines that were hitherto down in Jebba, he was certain that the country’s power challenges can be overcome.
Speaking on the resolution of the three year old dispute, Fashola said, “a very momentous milestone”, had just been witnessed, adding that the venue of the event was crowded because it was also being used for a meeting on the Energy Mix being developed for the country.
Commenting on the calibre of people involved in brokering the truce on both sides, the Minister declared: “it is important to see that two people who have served this country as Ministers are on different sides of the fence, Prince Tokunbo Kayode SAN, and Professor Barth Nnaji. It’s also interesting that the Vice President, Professor Yemi Osinbajo SAN, to whom l must show appreciation for not only initiating this process but for trusting our Ministry with the responsibility to see it through, our gratitude to him is deep and profound.”
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Fashola, in a statement by HAKEEM BELLO, SPECIAL ADVISER on Communication to the Minister, noted that though courts may be the right place to resolve disputes, common sense will make more meaning to the people of Aba and to the traders in Ariaria, who would benefit immensely from the resolution of the dispute.
He noted that the development would also be a major boost for “Made in Nigeria “goods for which the markets in the area had been famous. Fashola said that it also made common sense to realise that the electricity market was beginning to evolve with the private entrepreneurship phase being just two years and a few months old.
“A lot of things will happen… that we may not even contemplate and one of them has happened today. It shows that within one DisCo, there can be two players there; so, even in spite of the energy crisis that we seem to be going through which is very temporary, we will turn this course. l see many more blessings and l see more opportunities round the corner and one of this is that investments worth over $500 million into the region can feel save,” he stated.
Speaking further on the significance of the event, the minister said that with the prospects of power being delivered from the project soon, it was good to have peace and productivity rather than flexing muscle over an asset that was not working, adding that he had more cheering news from the Sector. “These are some of the silver linings on the clouds of our energy crisis. Again… we had some outages on our turbines in Jebba but l am happy that three of the four have been put back into operation and that there is again stability in the system,” he remarked.
The importance of the Aba project, the Minister explained, “Again, it is important that the power coming from Aba is defining. Like l said, the power coming into the country is not enough and how do you share what is not enough, it is not possible. So, what we need to do is generate more power. The 200 megawatts coming from Aba is very important and it’s good news for the market,” adding that one of the country’s power plants close to completion (Gbarain in Bayelsa State ) was fired last night for pre-commissioning tests.
“The first turbine is on and is being synchronised and that is what we are saying and with incremental power we will achieve the target set by Mr. President in his speech last week,” he said.
While thanking the Permanent Secretary of the Ministry, Loius Edozien, for working arduously to realise the truce with all the parties, Fashola also acknowledged, former President General Abdulsalami Abubakar for his vital intervention at a critical moment.
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In their respective remarks after signing copies of the agreement, the representatives of Enugu Electricity Distribution Company PIc, Prince Adetokunbo Kayoed SAN, and Geometric Power Limited, Professor Bart Nnaji, commended the Minister for brokering the truce even as they also thanked the president and the Vice President of the country as well as the Permanent Secretary of the Ministry.
“We know the importance of power and the efforts that the government and the Minister is putting into it. Over the weekend, l listened to the Minister’s sermon on youtube on his views about the power sector. l call it a sermon because it’s not only about today but also addressed to the future generations. It also shows that he understands the various multi faceted challenges facing the power sector. All of us must understand that power is big business and must move away from litigation and do the business of power,” Adetokunbo said.
Professor Barth Nnaji underscored the significance of the occasion thus: “today, to us, is a historic day. It is historic because a sector that is largely driven by the private sector has its first major crisis resolved it is wonderful that this has been done by the efforts of the minister and this administration.”
The Enugu Electricity Distribution Company (EEDC) and Aba Power Limited dispute which was resolved had dragged on for three years leading to two court cases and the denial of 141MW to the people, businesses and industries of Aba. The additional power would have helped transform their lives for the better.
On May 11 2004 Geometric Power Limited (GP) had entered into a memorandum of understanding to build a power station at Aba that would be dedicated to supplying consumers, businesses and industries in Aba.
In April 2005, GP and its sister company, Aba Power Limited (APL), signed an agreement with FGN and then NEPA, to formalize the arrangement. When PHCN was created out of NEPA and unbundled, pursuant to the EPSR Act a Supplemental Agreement was made in 2006 with PHCN, TCN and EEDC to:
– lease to APL the distribution facilities in Aba and Ariaria business units of EEDC covering 9 out of the 17 local government areas of Abia state.
– permit Geometric Power to supply electricity to the leased or ring-fenced area
– grant a right of first refusal to APL to purchase the ring-fenced franchise should FGN sell EEDC.
In recognition of this arrangement, in 2006 BPE registered Aba Electricity Distribution Company Ltd as a 12th successor distribution company.
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GP and its partners have since invested in the construction of a 141MW power station at Aba. It is nearing completion. APL has since invested in and completed 95% of a major the upgrade of the distribution facilities in the area to receive the power.
The dispute arose when BPE privatized EEDC and Interstate Electric (IEL) emerged as the winning bidder then paid for the entire franchise including the Aba and Ariaria business units. The operations were taken over by the new EEDC management led by IEL in November 2013. APL’s ongoing upgrade was suspended. GP and its partners had relied on payment assurance by APL operated and upgraded distribution facilities without FGN guarantee. They did not consider EEDC operation led by IEL without the upgraded facilities provided adequate payment security.
Two court cases ensued. The three year standoff has
– denied consumers in Aba and Ariaria the service improvements 141MW and new distribution facilities would bring,
– threatened GP and APL’s investment which they claim is $530m,
– denied IEL and EEDC access to the additional electricity GP can provide to the entire franchise area not just Aba and Ariaria
– tied up all the parties including IEL, EEDC and FGN in costly litigation, court proceedings, and
– delayed FGN’s commitment to improve electricity rapidly.
Over the past three months Ministry for Power Works and Housing was mandated by the Vice President to facilitate meetings between EEDC and GP/APL to work out a mutually beneficial commercial solution to the dispute.
The parties have agreed to a commercial arrangement to settle the dispute which had the following terms among others.
– EEDC, a joint venture of FGN and IEL, will cede the distribution/retail franchise in Aba and Ariaria to FGN and APL while retaining the distribution/retail franchise for the rest of the Abia, Enugu and Ebonyi states.
– GP will supply power to FGN/APL distribution franchise for Aba and Ariaria
– GP and EEDC may also come to a commercial agreement whereby GP will supply power to EEDC to improve services to all EEDC’s customers or targeted ones.
– The parties will withdraw all cases from courts and concentrate on running their businesses and improving services to their customers
Government as the regulator and superintendent of the industry and 40% owner of the distribution franchises, supports the initiative and will take necessary steps to operationalize it, especially through
– adjustment of EEDC’s operating license to reflect the adjusted franchise area, and
– transfer of assets in Aba and Ariaria from EEDC to FGN/APL.
– perfection of the operating license in Aba and Ariaria for FGN/APL.