How Obasanjo Bypassed Due Process to Pay Contractors

No Comments » March 24th, 2008 posted by // Categories: Energy Development Project





How Obasanjo Bypassed Due Process to Pay Contractors

From Stanley Nkwazema in Abuja, 03.25.2008

Power Probe

As the House Committee on Power and Steel probing power sector funding between 1999 to 2007 meets tomorrow to consider over 80 exhibits presented to it during its public hearing, more revelations have emerged on how the former president, Chief Olusegun Obasanjo, waived due process for payments and made anticipatory approvals for the power projects.

THISDAY further learnt that the Implementation Committee also incorporated the Niger Delta Power Holding Company Plc with the Corporate Affairs Commission (CAC) and made 25 per cent advance payments to three companies, Messers Lahmeyer International/O.T. Otis Engineering  and a supplier of power generation equipment and related services, General Electric  Company (GE), without the necessary approval.

A document made available to THISDAY showed that the Federal Ministry of Power  had written to Obasanjo on 22nd November 2005 vide a letter FMP&S/HM/ABJ/033 entitled “Implementation of the Niger Delta Integrated National Power Project: Request for Approval for Payments”.

He told Obasanjo that “Your Excellency may please wish to recall that you gave approval for the implementation of seven new medium-sized power plants in the Niger Delta Region at an estimated cost of $2.5 billion (two point five billion Dollars ) i.e N309.7 billion  (three hundred and nine billion point seven billion Naira only).

“We wish to intimate Your Excellency  that the project implementation  committee  has incorporated  a company – Niger Delta Power Holding Company  Plc with the Corporate Affairs Commission.

“Furthermore, a design consultant Messer Lahmeyer International/O.T. Otis Engineering and a supplier of Power Generation Equipment and related Services – General Electric Company (GE) has been engaged and 25% advance payment effected.

“More equipment procurement and Consultancy/Construction services will be entered into as the implementation of the project progresses.”

The documents further stated that “to ensure a timely implementation of the projects, a fast-track approach has been adopted which requires Mr. President’s general approval to effect all payments to contractors handling the projects from the Excess Crude Oil Accounts.”

The letter signed by the minister which was restricted and approved the next day November 23 by Obasanjo also told the President to note that “the estimated cost of the seven medium sized power plants in the Niger Delta region is $2.5 billion (two point five billion dollars) i.e. N309.7 billion (three hundred and nine billion point seven billion naira only).

“To fast track the implementation processes within the agreed time frame, there is need for Presidential Approval to use the Excess Crude Oil accounts to pay all contractors handling the projects.”

The minister prayed that “the funding of the Seven Medium Sized Power project be made from the Excess Crude Account”.

This would seem to confirm the testimony of the Director General of the Due Process Office, Mr. Emeka Eze, when he appeared before the House Committee that Due Process was not followed in the payments.

The implementation committee also requested from Obasanjo that “payment for all contractors /Consultants engaged on this project is made against the Due Process Certifications already issued by the Presidency”.

The letter also requested the President to direct “the Minister of Finance to approve payments to all Contractors /Consultants handling the jobs from the Excess Crude Oil Accounts”.

Obasanjo, in a bid to ensure that the content of the letter was implemented rather than approve the letter, again in a foot note in his handwriting copied the Minister of Finance and the Governor of Central Bank, approving the request.

THISDAY investigations also show that two months after the communication, Obasanjo through a letter dated February 8 2006, from the State House Abuja copied to the Minister of Power and Steel, Finance, the Accountant General of the Federation, the Governor of the CBN, directed that his approval be conveyed to the respective officials.

The letter signed by his Special Assistant, Taiwo Ojo, which he also countersigned, was also copied to Chief of Staff, Principal Secretary to the President and for the external information of the Secretary to the Government of the Federation.

The minister had in the letter to Obasanjo requesting “Waiver of Due Process Certificates for Payments” said “the NIPP has effectively commenced with contracts already awarded for: the supply of gas turbines  Generators and their required Power Transformers, the engineering  Procurement and Construction of Balance of Plants as required for the proposed  power plants: and the necessary transmission lines that would evacuate resulting new generation capacity, while closing the loop to an otherwise radial national transmission grid.”

In what is seen as a bid to justify Obasanjo’s  personal approval of the projects,  and a seeming contradiction to earlier statements, the minister also reminded him “that the processes and procedures  for the award of each of the above listed contracts, and indeed for the award of any and all of the contracts associated with this project, were personally approved by Your Excellency before and after the issuance of Due Process certification  for their award after undergoing world best practices in their  procurement of major power infrastructure.”

The letter to Obasanjo also stated that he was no doubt informed about the usual challenges associated with the implementation of such projects on a fast-track basis.

“However, the given time-frame, environmental challenges and human factors working against this project are almost insurmountable. These challenges have caused Mr. President to grant special consideration to this project, if it’s very aggressive,” it added.

The letter  also  stated that “in this regard, anticipatory approvals were granted by Your Excellency for the award of contracts under this  project,  the BMPIU, under  instructions, treats all  requests for certification  on this project as priority cases ; expedited processes are being put in place  for the payment of resulting invoices  by the Federal Ministry of Finance , the Central Bank and the Office of the Accountant General of the federation”.

The minister also in the letter disclosed that the payment of invoices was already proving an added challenge while confirming that the average time taken for the first few invoices forwarded for payment had been 52 days.

“A minimum of 20,000 payments are expected to be made over the next fifteen months, Due Process Certificates for payment is being requested in order to expedite payments by the AGF’s office. This can only add more days to the processing cycle for each invoice,” the letter said.

The minister therefore told the former President “to note that (a) the NIPP has earnestly commenced. (b) The process for the procurement of products and services associated with this project has been rigorous, painstaking and lengthy, taking over an average of seven months before contract award. (c) Expedited processes /procedure are being put in place to fast track the project. (d) Your Excellency has graciously granted Anticipatory Approvals for the award of required projects (e) the first invoices for the projects have taken an average of 52 days to be paid. (f) Additional documentation in the form of DPC for payment is being requested which will lead to more delays in invoice payment and (G) Approve the waiver of DPC for payment as a condition precedent for the payment of invoices on this project”.

The president, in handwritten approval dated 08/02/06 with his signature, copied it again to the Minister of Power and Steel, the AGF and the Governor of CBN.


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