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Nigeria approves N33bn intervention fund for meter procurement


Nigerian Tribune

by Gbola Subair

The acute shortage of electricity meters in the country will soon be a thing of the past as the Presidency has approved the sum of N33 billion intervention fund for its procurement.

The fund, which attracts a very low interest rate, will be made available to Distribution Companies (DISCOs) to buy meters and other electricity accessories with a view to bridging the meter deficit gap which is about three million yearly.

The Director-General of the Bureau of Public Enterprises (BPE), Mr Benjamin Ezra Dikki, speaking in Abuja, also gave an assurance that the fixed charge currently borne by electricity consumers in the country would be dispensed with as soon as power generation increases to an economically sustainable level.

The director-general, who said the fixed charge was a temporary measure, appealed to electricity consumers to bear the burden, as it would soon be abolished, noting that the country had an installed power capacity of 6,000 megawatts, but was generating only about 3,000 to 4,000 megawatts. 

The BPE boss stated that the revenue from the 3,000 megawatts was not sufficient to support the power infrastructure.

”When power generation increases, the fixed charge will go,” he maintained.

According to him, it was the initial sacrifice consumers had to make given the huge financial investment made by the new power investors who are yet to obtain adequate returns on their investments.

Dikki added that as what obtained at the initial stages of the reform in the telecoms sector, when the cost of   the Subscriber Identity Module (SIM) cards and telephone handsets was as high as N50,000 per SIM, “the electricity fixed charge will also crash.”

Dikki debunked claims of lack of transparency in the privatisation of Kaduna Electricity Distribution Company (KEDC) and the picture created of a conflict between Geometrics Power Group and Interstate Electrics Ltd, the core investor of Enugu Distribution Company.

On KEDC, he said the reserved bidder could only be invited to step in if the preferred bidder failed to pay.

He added that the preferred bidder was, within the time limit, to pay the 75 per cent balance of the bid price after an initial payment of 25 per cent had been made.

The director-general said it was wrong for anybody to call for the revocation of the sale, as the process had to complete before reversion to the reserved bidder could be made.

On Geometrics, Dikki explained that it had a 20-year contract with the Enugu Distribution Company to supply power to the Aba and Ariaria districts, which is not in contention.

“Both parties are aware of this but it baffles me when people go out to deliberately distort the facts. We don’t understand the hue and cry that Geometrics is short-changed in the transaction,” he said.

Nigeria: TCN Contract Cancellation, Yet Another Setback?


AllAfrica.com

BY YUNUS ABDULHAMID

November 15, 2012

The hiring of Canadian firm, Manitoba Hydro, to manage the Transmission Company of Nigeria (TCN) took the Bureau of Public Enterprises (BPE) five years and enormous resources to conclude. It was seen by industry watchers as a major step forward for the power reform process. The cancellation of the contract by President Goodluck Jonathan could well be a major blow to the reforms.

Managing Director of Manitoba Hydro International in Nigeria Mr. Don Priestman yesterday expressed shock over the reported cancellation of its management contract to run the Transmission Company of Nigeria (TCN) for a period of three years.

He said his company was yet to get any official correspondence terminating the contract has been but they only learnt of the development on the pages of newspapers.

In a telephone interview, Mr. Priestman said: “I haven’t really received any formal notification yet. All I know is from the newspapers. So, we are also surprised and disappointed. We don’t understand the reason behind it but we are just waiting to receive a formal notification. I was hoping that sense would prevail and that it was just a question of time. We were willing to give time for the right decision to be made so we could get out of it.”

TCN is one of the successor companies created from the unbundling of the Power Holding Company of Nigeria (PHCN). It combines the functions of a transmission services provider, a system operator and a market operator, all of which are central to the sustainability and development of the electricity sector.

Priestman said his next step was to, “wait for instruction from my head office.”

Nigeria is Africa’s most populous nation of more than 160 million and holds the world’s ninth-largest gas reserves but is blighted by power cuts which last several hours a day, forcing businesses and individuals who can afford them to rely on diesel generators.

The Federal Government is in the middle of privatizing the bulk of its power plants and distributing networks, in a reform process supposed to give foreign investors the confidence to provide the estimated $10 billion-a-year the electricity sector needs.

It all started with the ‘forced’ exit of Prof Barth Nnaji as power minister in August who investors and development partners said inspired confidence to invest.

Recently, the announcement of companies linked with controversial political money bags as preferred bidders for the unbundled units of the PHCN attracted hue and cry from stakeholders who expressed fear that they were being sold to government cronies.

An indication that all was not well with the TCN contract came to light on November 2, 2012 when Don Priestman spoke with newsmen at the West Africa Power Pool (WAPP) conference in Abuja, where he had raised alarm that two months after the contract was billed to commence, his firm was still waiting to get the ‘delegated authority’ from the federal government to start work as provided by the contract’s terms.

Priestman had said: “The first month, August, was a transition month and according to the contract, starting the 1st of September, the schedule of delegated authority should have been issued, which would have given us full authority for running TCN. That has not happened. It’s unfortunate. I think you will have to ask the authority why not.

“We are ready and keen to proceed, we have the people here, we know what to do, we have done something similar in other countries with success. So we hope there won’t be much more delay before we can start doing what we came here to do. It’s difficult to do a job when you are not in charge. Right now we are working closely and we are observing, we are making suggestions but we are not in control.”

At the same event, however, the Permanent Secretary in the Ministry of Power, Mrs. Dere Awosika, who represented the Minister of Power, contradicted Priestman’s position.

She told newsmen when asked to clarify Priestman’s position: “Why do you think they are in this meeting? They are already working.”

When further asked if Manitoba was being incorrect and whether the schedule of authority was already in place, she said: “Am not saying so. You want us to just throw out the issue without smoothening ends.”

News, however, broke out on Tuesday night that President Goodluck Jonathan had cancelled the transaction. Reuters quoted Presidential spokesman Rueben Abati as confirming the cancellation of the transaction by President Goodluck Jonathan with immediate effect.

He was quoted as saying the power ministry would issue a statement as to why the deal was cancelled but till press time last night, the ministry had not.

The ministry’s spokesman, Mr Greyne Anosike, told Daily Trust on phone that a statement would be issued after full briefing.

The BPE kept tight lips last night when asked to comment. Its spokesman, Chukuma Nwokoh, said ‘no comment’ when asked the bureau’s reaction to the cancellation of the contract which took it five years to complete.

In September, when Manitoba was to resume as management contractors at the TCN head office in Abuja, PHCN workers stoutly resisted the move. They alleged their jobs were at risk given that the Federal Government had not finalized retirement and disengagement terms with them.

However, then minister of power, Prof Barth Nnaji, said Manitoba would bring only eight staff while existing indigenous staff would be in the shadow as deputies.

He said: “They (Manitoba) are not going to get rid of TCN workers but they will bring in a few people to work with the TCN people and more importantly, they will bring their expertise. They will bring in speed; be able to anticipate issues and problems and address them proactively. This is what we don’t have in the public service.”

The road to the appointment of Manitoba Hydro International of Canada has been long and tortuous. The process started five years ago by the Bureau of Public Enterprises (BPE) during the administration of President Olusegun Obasanjo in 2007.

Manitoba Hydro International won the bid to manage the TCN through a bidding process and consequently signed the $23.7 million management contract with the bureau last July. The Power Grid of India lost out in the bidding contest.

The process was stalled during the administration of late President Umaru Yar’Adua, who rolled back the power sector reform and privatisation programme.

However, when Jonathan took over in 2010 and launched the Power Sector Road Map that same year, the Federal Government directed the BPE to continue with the process from where it had been stopped, rather than re-advertising for prospective companies to express interest all over.

Reports suggested that the president’s decision to cancel the contract was based on a memo sent by the Bureau of Public Procurement (BPP), which for several weeks, had been pushing for its cancellation on the premise that it did not pass through due process as provided under the Public Procurement Act.

Director General of the BPP Emeka Eze was said to have kicked against the appointment of Manitoba because a few material irregularities had been noticed in the process that led to the company’s selection.

Eze was said to have informed the president through the memo that a management contract was distinct from a privatisation transaction or concession, and since the procurement of all Federal Government contracts, including those covering professional services are covered by the Public Procurement Act, the BPE should not have superintended the selection process.

Eze was also said to have insisted that if the BPP had overseen the procurement of the contractor, it is the Federal Executive Council (FEC) that should have approved the selection of Manitoba based on the bureau’s recommendation.

The president has reportedly directed the Ministry of Power to handle the selection of a new contractor for TCN within 30 days.

 

Standard Bank Group is leading investor in South Africa procurement process


PV-TECH.ORG

By Nilima Choudhury

November 13, 2012

South Africa’s Standard Bank Group has emerged as the leading investor in the first round of the country’s renewable energy independent power producer (REIPP) procurement process, backing a total of 11 solar and wind projects.

The South African government has allocated 1,416MW for this first round of the procurement process, worth about R47 billion (US$5.3 billion) of fixed investment, of which the majority, around R27 billion (US$3.1 billion), will be funded by debt.

Standard Bank Group will provide comprehensive corporate and investment banking services to all its clients in the REIPPP programme, including underwriting R9.4 billion (over US$1 billion) worth of debt, providing interest and currency hedges, carbon trading credits and corporate bonding and guarantee facilities.

The bank’s clients include 338MW of wind and 235MW of solar PV, out of the combined 1,416MW per year expected to be produced by all the projects. Standard Bank Group itself has also taken an equity stake in four projects.

Alastair Campbell, Executive Vice President, Power & Infrastructure Finance at Standard Bank Group said: “Standard Bank will be ready to disburse funding for most of the projects as soon as all documentation is finalised and hedges are closed.”

Developers will have until 16 November 2012 to finalise all their documents and foreign currency hedges, after which projects can be rolled out.

“This confirms that there is considerable appetite from developers and banks to invest in renewable energy projects in South Africa. Standard Bank has been involved in the emerging story of power generation from inception. We participated in the Integrated Resource Planning public hearings which re-affirmed REIPP procurement process as an accepted way of diversifying our energy mix and reducing carbon emissions,” continued Campbell.

Further bidding rounds are expected to take place roughly six months apart from 2013 onwards to allocate the total 3725MW. In line with the country’s long-term power plan, South Africa aims to secure a total of 17,800MW of renewable energy or 42% of South Africa’s new generation capacity by 2030.

Standard Bank Group said it is already preparing for the financial close of the second bidding window and is supporting the third bidding window. The second bidding window is expected to close in the first quarter of 2013.

“We have already committed a total of R6.1 billion of debt out of a total R19 billion to preferred bidders on the second bidding window. The second programme is smaller than the first and will have a total of 19 projects. Standard Bank is supporting preferred bidders on five of these projects,” said Ntlai Mosiah, Head of Power and Infrastructure SA Advisory and Coverage at Standard Bank Group.

“As the programme unfolds, an increasing number of benefits are expected for the South African electricity consumer. Chief amongst these is the expected fall in tariffs bid due to increasing interest and competition in the process. We are expecting that renewable energy prices will reach grid parity in the foreseeable future.”

Mosiah continued: “An aligned major benefit will emerge from increased local component manufacturing with its associated industrial development and job creation, an aspect that government has insisted should be accelerated.”

Iranian bidder sparks halt to $2 bln Uganda dam project


Reuters Africa

September 7, 2012

By Elias Biryabarema

KAMPALA, Sept 7 (Reuters) – Uganda has halted plans to develop a $2.2 billion hydropower dam after objections were raised over the short-listing of an Iranian company in potential contravention of international sanctions, a procurement official said on Friday.

Billed as one of East Africa‘s largest infrastructure projects, construction of the 700 MW Karuma dam on the Nile river was expected to begin by the end of this year aimed at overhauling the east African nation’s stuttering energy supply.

“We received petitions by a whistleblower and representatives of other companies which were left out who said one of the firms that prequalified was an Iranian (firm),” said Vincent Mugaba, spokesperson for Public Procurement and Disposal of Public Assets Authority (PPDA).

“The Iranian company would not have the capacity to conduct international trade in light of sanctions imposed on Iran so we have halted the whole procurement process until we complete an investigation into the matter,” Mugaba said.

Washington and Europe have imposed sanctions on Tehran over its disputed nuclear programme. Some of the sanctions make it difficult for other countries to trade with Iran.

Mugaba said PPDA had requested the energy ministry, which is managing Karuma’s procurement process, to explain why it had overlooked the impact of sanctions on the Iranian company, Perlite Construction.

“What happened was that when we prequalified the Iranian company the U.S. sanctions had not come into effect but of course we realise that the company might have problems executing the contract if its bid was to be successful,” Yusuf Bukenya-Matovu, a public relations officer at the energy ministry, told Reuters.

“Uganda isn’t bound to respect U.S. unilateral sanctions but nevertheless there are implications. Perhaps there would be problems if the Iranian firm were to win but we’ll cooperate with the PPDA investigation,” he said.

LATEST DELAY

The Karuma dam is expected to more than double the country’s total power output. The state-run Electricity Regulatory Authority says Uganda produces a total of 550 MW while power demand at peaks stands at about 480 MW.

The snag was the latest to stall progress on Karuma, which the government is banking on to help prevent persistent power outages that have put a strain on the economy and discouraged investors from pouring more money into the oil-rich country.

Several years ago, a Norwegian investor that had expressed interest pulled out because it failed to secure funding for the project.

The Ugandan government wants to develop Karuma as a public-private project with the private investor as lead financier.

Uganda is keen to woo investment in its cash-starved energy sector to rapidly increase its generation capacity and in October plans to start pegging power tariffs to changes in inflation, international fuel prices and the exchange rate to make the sector more attractive.

Energy officials say the internal rate of return for energy projects in Uganda is fairly attractive at between 15-18 percent and higher than South Africa’s 12-14 percent, although the country has a higher risk perception.

Commercial hydrocarbon deposits were discovered along the Albertine rift basin along its border with the Democratic Republic of Congo in 2006 and reserves are estimated at 2.5 billion barrels. (Editing by Yara Bayoumy and Jason Neely)

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Canceling Out The ‘Background Noise’ On Egypt-Israel Relations


Minnesota Public Radio

by Dana Farrington, National Public Radio

April 29th, 2012

By ending a historic gas contract with Israel, is Egypt laying the groundwork for a fundamental shift in relations? Not quite, says Rob Malley of the International Crisis Group.

Malley, program director for the Middle East and North Africa, talks to NPR’s David Greene on Weekend Edition about last week’s announcement, which raised questions of political rifts. Malley says:

“What we’re seeing right now is a lot of noise, but no real change, partly because — if not essentially because — both the Israelis and the Egyptian security establishment believe that the relationship is critical for both of them.”

Israel and Egypt signed the historic Camp David peace treaty in 1979, and The Associated Press reports:

“While relations have never been particularly warm, the quiet border has been critical for the security of the two neighbors. Egyptian energy exports to Israel and other business ties have helped keep the peace.”

NPR’s Sheera Frenkel reports for Weekend Edition that the gas deal was signed in 2005 and intended to last for at least 15 years. Reuters calls it “the most significant economic agreement to follow” the 1979 treaty and Jordan’s treaty with Israel in 1994.

Israel has been getting about 40 percent of its gas from Egypt, according to the AP, yet Egypt said last Sunday that it was ending the gas contract. Government spokespersons in both Israel and Egypt are trying to downplay the issue as a dispute between two companies rather than a threat to the peace treaty, Frenkel reportsRead more.

Zambia: Inefficiency, expensive financing leads to high fuel cost


Times of Zambia

By Davies M.M Chanda,

October 31, 2011

THE Wynter Kabimba commission of inquiry on the Energy Regulation Board (ERB) has heard that Zambia has the highest cost of fuel in the mainland Southern African Development Community (SADC) regional bloc because of procurement inefficiency and an expensive financing arrangement.

The Zambia Association of Manufacturers (ZAM), in its written submission before the commission has proposed that Government should rationalise the tax regime for both crude and finished products by lowering them.

According to a written submission presented to the commission by the Zambia Association of Manufacturers vice-president Steve Mwansa, the price of diesel in 2008 for Botswana was US1.19, Malawi US$0.96, Mozambique US$1.05, Namibia US$1.04, South Africa 1.04, Swaziland US$0.99, Tanzania US$1.05 while the cost in Zambia was about US$1.48.

The submission made available to the Times yesterday state that Government should also issue permits to oil marketing companies to supply areas according to their geographical location such as Nacala development corridor supplying Eastern Province while addressing alternative routes such as Angola and Mozambique.

Mr Mwansa said with good practices as recommended by ZAM, the country’s cost of fuel could reduce and estimated 19 per cent for petrol while diesel price would drop by 17 per cent and that Kerosene would sale at 21 per cent less than the current price.

ZAM cited poor feedstock cargo formulation, lack of adequate national reserves, inefficient feedstock processing and underdeveloped infrastructure for the importation of the finished products. The association also stated that the taxation system was the highest within the mainland SADC member states and that Government levies, duties and other taxes were higher in Zambia compared to other countries. ZAM has since called for a more transparent procurement system for crude oil and comingled petroleum which should also reduce supply chain costs.

There was also a call for balancing the reduction in tax on fuel with the increased collections from other sectors such as mining. The tax in Botswana, Malawi, Mozambique, Namibia, South Africa, Swaziland and Tanzania ranges from 0.06 to 0.44 per cent while in Zambia, it stands at 0.55 per cent. The commission was constituted by President Michael Sata last month to establish what was causing the cost of fuel to remain higher than the rest of the region and establish bottlenecks in the procurement system.

Mr Mwansa said there was need to invest in preventive maintenance for the Tanzania-Zambia oil pipeline to reduce on the losses and that ERB percentage fees should be reduced. The commission is expected to hold its sittings today at the Mulungushi International Conference in Lusaka before moving to Ndola on the Copperbelt Province where sittings will take place at the council chambers.

Uganda: NGO sues UMEME over contract


New Vision 

By Roderick Ahimbazwe

A non-governmental organisation has taken UMEME to court over failure to make details of its 20-year-concession contract public. 

The power distributor is jointly sued with the Government and the sector regulator in a suit filed at the High Court in Kampala yesterday.

The African Institute of Energy Governance (AFIEGO) along with 1,927 others want the Government to reveal the details of the contract it signed with UMEME.

The public who are the consumers are entitled to know what transpired between UMEME and the Government when signing their contract. That is why we are taking UMEME,  the Electricity Regulatory Authority, the Uganda Electricity Distribution Company Limited and the Government to court,” Dickens Kamugisha, the AFIEGO chief executive officer, said yesterday.

Kamugisha revealed that his organisation had tried to ask UMEME for details of the contract but that they had been told that the contract was confidential.

“We want court to terminate this contract because the terms are very unfair to the people of Uganda who are the consumers of power,” he noted.

Kamugisha observed that since UMEME was getting paid for any power losses, it was not in its interests to improve electricity services because it stood to gain from the rebates.

Kamugisha also wondered why the findings of the Saleh Commission were not being investigated by the Government. The Saleh Commission that reviewed the UMEME contract found out that the tariffs were expensive, while the Government was paying a lot of subsidies to UMEME.

“The commission made several recommendations, which are yet to be implemented,” Kamugisha said.

He said his organisation, unlike the Saleh Commission, does not want the contract reviewed but rather terminated and the running of the electricity sector given back to the Government or put up for competitive bidding. Owen Murangira of Murangira and Advocates, the AFIEGO attorneys, said his client was concerned about the high electricity charges and the poor billing system based on estimation.

“AFIEGO wants electricity to be declared a right so that everyone is entitled to cheap power. It also wants the billing of power by estimation to be declared unlawful,” he said.

The Nigerian million march


Next

By Segun Balogun

September 11, 2011

Why this project at this time?

This project serves two purposes: to set the agenda for the new administration to the effect that lack of electricity in Nigeria will be first priority and nothing else. And to create a greater awareness that, the lack of electricity denies Nigerians of their fundamental basic necessities of life.

We want to drive this point home to the Nigerian leadership and as such, we are calling for a simultaneous peaceful Nigerian Million March set for October 24th, in Abuja, Lagos, Port Harcourt, London, and several locations in the USA; to express our discontent and to bring global attention to this problem and, with the hope of forcing and pressing our leaders to perform. We are also encouraging the citizens of Nigeria around the globe who are not fortunate to be physically present at any of the locations, to organise a march wherever they reside.

Many Nigerians have different sordid electricity tales to tell. You live in the US, so what sordid tale kick-started this project?

The date was Thursday February 3rd 2011. I read an article in a Nigerian newspaper titled “Government intensifies effort to generate power from nuclear sources.” I could not believe what I just read. As a nation we are not able to effectively manage a conventional power grid and, here we are “intensifying effort” at Nuclear power. This, to me, is a brazen “Bait and Switch” scheme, perpetrated to suction our money for the next 100 years.

I was livid, to say the least, and was madly upset after reading the article. Enough already. I slapped the dining table. This is another ploy of diverting attention from solving the pressing electricity crisis. We are about to embark on another white elephant project, a very dangerous one for that matter.

All Nigerians should be mad too. Nuclear power is no child’s play. In the United States, no community wants such a project in their neighbourhood. It’s called a “NIMBY” (Not In My Back Yard) in the wake of the nuclear disaster in Japan due to earthquake. The country is now planning to eventually phase out operation of nuclear plants. Germany is also planning a gradual phase out as well due to high risks involved in nuclear plant operations. It requires an astronomical technical capabilities and a world class maintenance culture. May I remind us of our maintenance culture? Zilch.

All things considered, the idea of Nuclear plant operation in Nigeria is a joke like many other projects such as the Ajaokuta project, the refineries. Nigerians, we need to wake up, and stop this nuclear train idea before, it leaves the station. Otherwise, we’ve got another giant sucking “black hole” scheme coming.

But federal government claims it is investing huge sums in the power sector, especially since the roll out of the power sector roadmap…

Of course, we at ‘Let there be light in Nigeria’ project group agree that huge sums of money were being poured into power sector. What is annoying is the excuse that government officials keep telling us such investments have “gestation period.” That’s the “Nigerian leader swagger talk” and it’s a code to cover up for business as usual, another contract fund embezzled.

Show us the project plans, the Scope, the Master Schedules, the Milestones, the Period of Performances, the deliverable dates on these contracts, rather than talking about “gestation” period.

There are thousands of contract that are several years past delivery due dates. Can someone show us a one mile radius in Nigeria today that has consistently sustained un-interrupted electricity supply, even after the huge sums of money that were poured unto the power sector?

It’s high time we expressed our major discontent against our leaders and press them very hard to start delivering on the electrification power contracts and to stop their wicked and cruel ways of continuously raking us over.

What exactly should Nigerians be demanding from government?

Transparency and accountability. At least, power issues do not fall under classified information. We want to know what happened to the funds expended on numerous contracts that had been awarded. Without this, we believe more investments will not necessarily solve the problem if, it keeps going the same route as the old investments.

We just want this electricity problem taken care of promptly and efficiently and we realise electricity is not a peculiar problem. There are plenty of solutions everywhere and around the globe to choose from…Read more.


Ghana: Don’t Renew Aqua Vitens Rand Contract


Water
Image by akshaydavis via Flickr

Allafrica.com

26 April 2011 by Masahudu Ankiilu Kunateh

People across all walks of life have passionately appealed to the President, Professor John Evans Atta Mills, as a matter of urgency, not to renew the water management contract with Aqua Vitens Rand. According to them, the company has worsened the urban water situation in the country. Aqua Vitens Rand, which has a five-year management contract and would expire in May this year, has not lived up to the expectations of the Ghanaian consumers. Some residents of Accra told the Business Chronicle during the Easter festivities that “for the past week we have no water for domestic use.” Read more

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