Geometric Power’s future still hangs in the balance by FEMI ASU

The fate of the $500 million Geometric Power project remains in the balance, as the National Council on Privatisation (NCP) and the Bureau of Public Enterprises (BPE) continue to dither amid mounting calls for the prompt resolution of the dispute over the controversial sale of distribution assets in the Aba area to the well-connected Interstate Electrics.

Geometric Power, which is promoted by Bart Nnaji, former power minister, is perhaps the most modern power station in sub-Saharan Africa, but its ability to light up Aba, the commercial hub of the southeast region, has been compromised by the suspicious sale of assets which had been pledged to it under a 2006 understanding reached with the Federal Government.

The power plant has capacity to produce about 141 megawatts (MW) of electricity in its first phase, with new distribution lines, four new sub-stations and three rehabilitated sub-stations. Each plant is to produce 47 MW of power, supported by a 60 MVA per transformer.

On May 11, 2004, the Federal Government, the now defunct National Electric Power Authority (NEPA) and Geometric Power Limited (GPL) entered into and executed a Memorandum of Understanding (MOU) under which GPL was granted the exclusive right to construct a 3 x 35 MW open cycle gas turbine power plant and designated sub-stations in Aba, Abia State, which would generate electric power for distribution by Aba Power Limited (APL) to residential and commercial customers and to industrial clusters in a ring-fenced island in Aba.

Electric Power transmission

The government, NEPA and APL executed a lease agreement on April 28, 2005 for the distribution of power to the ring-fenced residential and commercial consumers at Aba. By the terms of the agreement, NEPA assigned its right to distribute electric power in the ring-fenced island of Owerri-nta, Osisioma, Ogbor Hill, Factory Road, and Port Harcourt Road in Aba, and also leased its distribution facilities within the contract area.

A supplementary agreement was made on August 31, 2006 between the Federal Government represented by the minister of power and steel, Transmission Company of Nigeria (TCN) and Enugu Distribution Company (EDC), and Geometric Power Limited. EDC and TCN were substituted for NEPA as parties to the lease agreement of 2005 and assumed their respective obligations.

The power project was conceived on the enclave model so it could have unfettered line to the 2.3 million people of Aba, through existing distribution assets which were to be sold to Geometric for further modernisation.

In view of this, BPE duly set up a special purpose vehicle (SPV) called Aba Disco Limited in 2006 to hold these assets for the purpose of their sale to Geometric Power or its agents.

However, a spanner was thrown into the works last year, when the BPE went ahead to sell the assets as part of Enugu Disco during the 2013 privatisation exercise, thereby shutting out Geometric.

BusinessDay learnt that Atedo Peterside, chairman, Technical Committee on Privatisation of the NCP, had in a recent position paper to the NCP recommended that the power distribution assets in Aba, which had previously been unbundled and a value for them ascertained by the Nigerian Electricity Regulatory Commission (NERC), be withdrawn from the 2013 privatisation transaction with Interstate Electrics and sold to Geometric, as was originally intended.

Instead of adopting this position for implementation by BPE, the NCP has curiously set up a panel headed by acclaimed accountant, Emmanuel Ijewere, to liaise with parties concerned to find a workable solution to the debacle.

BusinessDay investigation shows that instead of going ahead with Peterside’s recommendation, the BPE has complicated matters by suggesting that Geometric and Interstate be encouraged to reach an agreement, which has so far been elusive.

It was the same BPE that isolated the distribution assets in Aba and placed them under the SPV; it was the same BPE that put information about this and the intention not to sell these assets as part of Enugu Disco, which was acquired by Interstate, and it is the same BPE that has so far shied away from enforcing its own rules regarding the matter.

Many believe that this otherwise simple matter has become complicated and is now victim of high-wire politics involving Vice President Namadi Sambo, who as chairman of the NCP, has so far refrained from making a clear order for the correction of the mistake made by selling power distribution assets in Aba to Interstate Electrics.

“If we cannot guarantee the investment of one of our own, what right has the government in seeking foreign investment into the country? This is simply laughable,” said one industry analyst.

According to him, the NCP’s prevarication now puts to question the government’s much-avowed claim to be seeking investment into Nigeria and in this case the power sector, which is one of President Goodluck Jonathan’s cardinal programmes.

Sources close to the presidency say the spate of information in the public domain on the Geometric issue has been a source of huge embarrassment to the president, but it remains a mystery why no concrete action has been taken to resolve the matter.

Another analyst said Nnaji and his co-investors, such as banks, were the only serious group offering to commit any private funds to developing power assets in Nigeria as early as 2006 when all others shied away, unsure of the seriousness of the government’s power privatisation programme.

As the future of the over $500 million Aba power plant still hangs in the balance, the darkness and misery being experienced by the 2.3 million people of Aba and its environs continue.

FEMI ASU