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Sokoto power contract mess

 

For thirteen years, a contracting firm, Vulcan Elvaton Limited alongside its foreign partner, Vulcan Capital Energy, have failed to fulfil a six month contractual term to install a multibillion naira Power Plant belonging to Sokoto State Government. TUNDE OMOLEHIN reports on how the project has dragged for years, denying Sokoto residents reliable electricity supply.
When the idea of the proposed Independent Power Project, IPP, was conceived by the Sokoto State government in 2008, Kabiru Kware, a rice merchant in the state was elated.

At least, he had one positive thought – that his rice milling business would receive a boost when the plant runs at full capacity, considering how power outages affect his business operations situated at Kalambaina Industrial Layout, a rice milling hub in Sokoto, the state capital.

“I still recall the day it was announced on the state radio that the state government was going to establish an Independent Power Plant in Sokoto,” said Kabiru, in an interview with this reporter.

“My projection for a boost in my business was high because for over five years now my milling machine most of the time runs on a power generating set powered by diesel,” he recounts.

Waiting too long

Like many small and medium scale entrepreneurs in the state, he had believed that the development could be the solution to the perennial power shortage in the state.

“Most of us who run rice mills were full of joy because our area hardly gets regular electricity from the national grid. But since then, nothing has been heard about the project.”

“All we hear on a daily basis is that the equipment have arrived and have been been installed. In fact, we have moved on and continued running our businesses without stable power supply,” Kabiru said.

According to records from the Transmission Company of Nigeria, a power regulatory body, between 2010 and 2019, Nigerian electricity consumers have had to contend with 206 power grid collapses.

A further breakdown of the grid collapse by the commission shows that 109 of the incidents occurred from 2010 to 2013, while 97 were recorded from 2014 to 2019.

Also, in 2020, the country went into total darkness 22 times, recorded 20 partial outages, 13 incidents of total collapse and six partial incidents in 2011. In 2012, there were 16 total collapses and eight partial ones.

 

The dying hope

Frequent collapse of the national grid resulting in blackouts in the state had made many Sokoto residents lose hope of electricity supply from the national grid, just like Kabiru, the rice Miller.

Mr. Wisdom, a Sokoto based Welding Technician says his hope of expanding his metal fabrication workshop has since been dashed due to inceasant power shortage in the state.

To say the least, he has waited for 13 years for the state’s project to provide an alternative to challenges of epileptic electricity supply from the national grid since the project was initiated.

The welding technician told this reporter that unstable power supply has made his business remain stagnant and this has drastically reduced his daily income. He has lost a number of customers who would have engaged him for urgent works.

“We have a lot of work on the ground but no light (electricity) to do such jobs. I can tell you that we run on our generator all working hours.

“The most painful thing is that our customers will not want to reason with us if such works were delayed while waiting for power supply. We have no option but to buy fuel and do their jobs,” he recounts.

Wisdom says he spend nothing less than N2, 000 on diesel on a daily basis. “At times, we can be without electricity for a week in this area (Offa Road). After buying diesel, I still pay the power distributor’s bill for electricity that I didn’t consume at the end of every month,” he further claims.

He revealed that as a result of power failure in the state, many of his colleagues in the welding profession have abandoned the trade and resorted to menial jobs for survival.

“Most of my contemporaries are no longer operating their workshops again due to this power supply challenge. One of them now uses his motorcycle for commercial transportation.

“We only hope that the state will someday, help us with an alternative power source like the abandoned power plant project,” Wisdom told Daily Sun while working on a metal gate.

His narrative was not different from that of Alhaji Saka, a refrigerator technician in the state. He narates how power shortage in the state has given him a nightmare.

“For more than 40 years I have been doing this work. The recent time has been the worst in terms of power supply in the state. We are hoping that the state power plant will succeed one day,” Saka says.

 

Inside the plant

Sited in the middle of a seven-hectare land at the Arkilla area of Sokoto metropolis, the project was approved in 2008, during the immediate past administration of Aliyu Wamakko.

According to the contractual agreement sighted by this reporter, it was awarded to the United States-based energy company, Vulcan Capital Energy, through a subsidiary, Vulcan Elvaton Limited at the cost of N3.8 billion.

The plant was to generate 38 megawatts of electricity for the state, upon completion within six months and was projected to have dual type turbines that can use diesel, gas or LPFO.

According to the then Information Commissioner, Dahiru Maishanu, the multi-billion-naira project was expected to light up towns and villages across the 23 local government councils in the state with a planned partnership agreement between the state government and Kaduna Electric, a distribution company for technical support.

Since it was birthed in 2008, two successive governments have battled to ensure the completion of the plant but both failed. Toward the end of Wamakko’s tenure, he had promised to ensure the completion but that did not happen.

Experts believe the project was awarded without recourse to the implication of cost of its operational and maintenance.

 

Politically motivated project

But renewable energy experts say using either diesel fuel or LNG for a plant with 33,000 litres capacity is not visible in the current situation as both products’ prices are now on the high side.

“That means the plant could consume products worth billions of naira within a year. I can tell you that no state government can venture into it,” says Tasiu Adamu, a Sokoto based electrical engineer.

He said the power plant remains a ‘political’ project in the state due to its non-completion by the current administration, which is initiating new ones. “The project may have been triggered by endemic corruption, which already exists in public establishments in the country.

“Ordinarily, this is a laudable project that any visionary government will embrace and ensure its completion. But, the reverse has been the case. Despite the importance of the project to the people, there is a perceived political mistrust among political leaders in the state which is believe to have resulted in the abandonment of the project,” Adamu further remarks.

Adamu also hinted that the power project is obviously unrealistic for any state government at present. He said: “Thirteen years after it was built, the plant is yet to be put into generation mode. Sokoto people should just forget the project.”

A retired director in the state Ministry of Works, who was prior to the implementation of the project, told Daily Sun how the plant lost its objective due to lack of political will on the part of the incumbent government.

“Go round the state, you will see projects abandoned since the 1980s. And nobody is talking. In each project proposed and executed, it must be for the interest of the government in power.”

On the power plant, he said the plant was conceived without putting into consideration the source of powering the plant.

“At first, the contractor promised to use diesel to power the plant. But this is unrealistic when you consider the cost of diesel. We argued that on various occasions. But there were lots of vested interests. In the end, I was due for retirement and I had to bow out.”

He said the project may remain incomplete unless it reverts to a friendlier and less expensive source of power. “What I mean is for the government to see the possibility of converting the plant to hydro-source. We have Goronyo Dam in the state with the capacity to roll its hydropower.”

 

Billions far spent, project yet uncompleted

In 2016, the Aminu Tambuwal administration reviewed upwards the project cost by over N1.67 billion from its original cost of about N3 billion based on recommendations made by a seven-man committee after the contractors failed to deliver as agreed in the contractual terms.

An official with the state Ministry of Finance who preferred to speak on the condition of anonymity told this reporter how the contract sum was repeatedly increased under the guise of reviewing its exchange rate variation cost by the previous government.

“Before Tambuwal took over this project, his predecessor raised the contract sum four times. All in the name of the soaring exchange rate in the country. In spite of this, the project could not be completed before his tenure elapsed,” the source confided in the reporter.

The committee, headed by a former Minister of Power, Bello Suleiman was to examine available documents, carry out physical assessment of the project and make recommendations to the state government.

But the committee chairman says his members did the needful by making wise recommendations to the government of the day, and urging the reporter to contact the appropriate person for comment.

“Please contact the Commissioner of Energy in Sokoto. I am not responsible for its completion. Our committee made recommendations and I am sure they will oblige you with the details of the progress,” Suleiman replied in a text message sent to his mobile phone.

Hassan Sahabi, spokesman to Aliyu Wamakko, could not be reached for comment.

Secrecy and cover ups

After several unkept appointments, Daily Sun met with the state Commissioner for Energy Development, Aliyu Dandinmahe, who gave an in-depth account on the thirteen-year-old power plant.

He chronicled how the project started in 2008 with noble intention to harness energy resources in the state, adding that the present administration had inherited the project.

“The governor, Aminu Waziri Tambuwal in his wisdom decided to convert this challenge to opportunity to the benefit of the people of Sokoto state. A committee was set up to review the viability of the project and advise the government accordingly.”

Dandinmahe admitted that a committee headed by a former Minister of Power recommended the completion of the project with additional N1.67 billion as variation cost to achieve the purpose, reiterating that the project is still alive and never abandoned as the public is made to believe.

“We are at the final stage of test running and connecting various components of the plant. In fact, this stage could have been completed by now but the COVID-19 pandemic put a stop to all things.

“Also, we discovered that 94 batteries in the main engine have all expired and we can’t get them until the manufacturers send them since the plant has not been handed over by the contractor,” the Commissioner explained while guiding this reporter on a tour of the plant.

Despite the physical shambles of the plant’s components on the site as noticed by this reporter, the Commissioner says the project is near completion. “Technically speaking, the power plant has been completed. We are only waiting for the damaged batteries to be replaced for its take-off,” he insists.

Early attempts to reach the contractors behind the project were abortive as both the Commissioner and other government officials declined to provide information and possible contact details, about any of the company’s shareholders.

Dandinmahe insisted that he was the official mouthpiece on the project, and not the contractors. For months, this reporter could neither trace the physical office of the contracting firm in Sokoto, despite handling a multibillion naira project in the state.

This development has further raised questions about the eligibility of the contractors as the address provided on the website of the Corporate Affairs Commission (CAC) indicates No.19, Adeola Crescent, Wuse II, Lagos.

A quick search initiated by Daily Sun showed that the address provided by the company’s promoters could neither be traced in Lagos nor Abuja.

The Freedom of Information Act, FOIA, request initiated by this reporter could not be sent to the contractors due to incoherence in the address made available to the public.

The Act states that to make “public records and information more freely available, provide for public access to public records and information, protect public records and information to the extent consistent with the public interest while section 2(7) of the FOIA provides that the Act is “applicable to private companies utilizing public funds or providing public services or public function.”

Documents obtained about Vulcan Elvaton’s incorporation from the Corporate Affairs Commission listed two Nigerians as nominal Directors namely; Franklin Richard Ngbor and Elvis Afam while Vulcan Capital Llc, its foreign partner and Elvaton Nigeria Limited were represented by Ford F. Graham and Christopher Afam) respectively as Directors. The foreign partners were later removed from the company’s stake after a bitter lawsuit that ensued.

How contractors use project as collateral, divert fund, court document reveals

In 2019, Vulcan Elvaton Limited and its two directors, Franklin Ngbor and Elvis Afam, were dragged into a lawsuit by Asset Management Corporation of Nigeria AMCON.

According to court documents sighted by Daily Sun, the case was instituted in 2019, The company and its Directors were alleged to have obtained various loan facilities in the sum of $11.45 million (about N1.7 billion) and another N50 million from a commercial bank which AMCON has since taken over for recovery.

The contractors had fraudulently claimed that the loan was to bridge the financing requirement for the purchase and shipment of a 37.5MW General Electric Frame 6B Turbine Generator and ancillary Equipment from Technical Assets Power Management Group, Arizona, United States of America for Sokoto State Independent Power Project.

They pledged that the source of repayment of the loan was to be from the proceeds of contract for the provision, installation and maintenance of the plant.

The two directors of Vulcan Elvaton who had agreed to be personally responsible for the financial obligation of the company in the event that the company failed to pay the loan with a clause for their personal guarantees however, defaulted.

First Bank refused to pay the sum it guaranteed in the sum of N1.8billion on the purported ground that its guarantee was for a specific time which had elapsed. The bank also discovered that in violation of the terms of the loan, Vulcan Elvaton did not supply all the goods it was paid to supply, hence, the refusal of the bank to honour the guarantee.

AMCON alleged that the loans were diverted to other uses by the defendants, and asked the court to order Sokoto State Government to pay all monies due to the defendants to AMCON until judgment sum is fully paid by the defendants.

Ngbor, one of the contractors, however, declined to give details on the outcome of the lawsuit when asked by Daily Sun. But an unnamed solicitor who has prior knowledge of the lawsuit said there was an order directing that all the proceeds and monies of the power project in Sokoto State in favour of the defendants be domiciled with AMCON.

He said that the litigation had caused a delay in the delivery of the plant, citing the disengagement of the company’s foreign partner, Vulcan Energy International, LLC and their agents, Technical Assets Power Management Group in Harris County, Texas from the project.

 

Breach of procurement law

But investigations about Vulcan Elvaton and its shareholders have revealed multiple twists. Records from the Corporate Affairs Commission confirmed that the company was registered with number, RC- 771096, on the 4th September 2008, the same year the multibillion naira contract was awarded to Ngbor and his partners.

This revelation contravened the Bureau of Public Procurement Act (BPP), 2007, which states that the minimum qualification for the awarding of any contract must have a Tax Clearance Certificate from the Federal Inland Revenue Service (FIRS) for at least three years.

It appears that Vulcan Elvaton Limited’s registration was projected for the purpose of bidding the Sokoto multi billion Naira power plant which it eventually declared as the highest bidder in November same year.

Further scrutiny carried out on the Commission’s website showed that the firm’s registration status has not been validated by its promoters for a while and has since remained inactive as an entity.

 

The contractors’ defence

After several months of efforts by this reporter, both Franklin Ngbor and Christopher Afam we’re eventually contacted to give more details on the project. At first, Ngbor had queried the source of his contact to Daily Sun while efforts to speak with his partner, Afam remained unsuccessful as he denied his identity with his verified phone contact when this reporter reached-out to him.

In a phone chat, Ngbor argued that the project has been completed in his own view. “The plant has been fired and tested three times. As far as I am concerned, I have completed the project.”

He reminds Daily Sun that the State Government was unable to connect to the National Grid, unless it took permission from the Transmission Company of Nigeria, an electricity regulator in Nigeria.

Ngbor also said the plant operation lies on the ability of the Sokoto State Government to meet various conditions set by the regulatory company. “They want to see a power purchase agreement between the end-users and the government. Two- they want to see fuel supply agreement; and three, to see the operation and maintenance contract.

“They need these three conditions before they can give go-ahead to connect the plant to the national grid. These conditions are not in the place of a contractor. I have built the plant for them. Operating and maintaining the plant is a different contract,” Ngbor maintains.

Ngbor admitted that there was a disagreement between his company and foreign partner which has also dragged the installation of the plant beyond reasonable terms. “As at when the contract was awarded, an issue came up with our initial technical partner and by the time the issue was resolved we had lost time.

“I thank God that the issue was eventually resolved before a new partner took over and completed it. The reason why some of the components are not working is that they have not been put into use for a long time.

“These components are supposed to be running but were put idle. If the critical things are not meant or provided for the plant to take-off, replacing these items like batteries will be futile because of the country’s weather condition. That plant is not built to be idle. It is like an aircraft engine which is supposed to be firing all day.

“I am tired of holding on to this project because if they insinuate that I benefited millions of Naira from the project, I want to tell you that the benefit is of no value to me now; because of the time wasted from the so called benefit having been plough back to the project again.” Ngbor maintains in a phone conversation with Daily Sun in Sokoto.

He argued that the source of power for the plant remains the best option for such a project if the state government can fulfil the conditions for its operation. “This project is a beautiful project for the good people of Sokoto state. It has the capacity to run for 50 years or above without switching off.

“All things being equal, it can run for five years before shutting down for maintenance. I have explained my side on the power project and my concern is to see the plant running. If there is something else you are looking for, I am not going to be available for you.”

 

The looting spree

The reporter’s last visit to the plant’s site was done in the last week of September 2021. When Daily Sun took a close aerial look through the perimeter fence, it was discovered that most of the plant’s components had been vandalised despite restriction order by the security guard who attended to this reporter.

The overgrown grasses surrounding the plant’s components suggest the plant has been abandoned. A source within the Ministry of Energy says most cable wires connecting the station plant have been cut-off and vandalized.

Ngbor had earlier corroborated the anonymous account and admitted that: “Yes, I was there last month where we discovered that they had stolen 58 drums of oil lubricant. Then, the armoured cables connecting to a switch component have been cut-off and stolen.

“That was done by none other than those that have access into the plant’s premises. It is unfortunate that I keep answering questions on why the plant has not been in operation,” the contractor remarks.

 

The twist

Both the state Commissioner for Energy, Dandinmahe and the contractor, Ngbor could not corroborate each other on why it is taking over a decade for the plant to commence operation.

While Dandinmahe dwells on the inability of the contractor to replace the damaged batteries of the plant’s turbine from the contracting partner based in the United States which according to him was caused by the global travel restrictions as a result of COVID-19 epidemic, the contractor shifts the blame to the state government.

He said inability to meet the regulatory requirements for national grid connection was the major cause of the project’s delay. He, however, admitted how an unexpected dispute between his company and contracting partner, Vulcan Capital Investment had dragged on for a while.

Investigation further reveals that both parties may have decided to be economic in given apt details surrounding the project and its procurement process, as earlier disclosed by Daily Sun.

The incoherence between the contracting firm, Vulcan Elvaton Limited and Sokoto Government officials on the project had further raised questions about its foreign partner’s competence in handling the multibillion naira power project.

The foreign partner, Vulcan Capital Management, claims in its incorporation to be an investor with “a private equity firm focusing on investments in distressed restructurings in natural resources and green technology sectors, – a claim hardly relates to power plant installations. A reach-out email sent to Vulcan Capital Management, the foreign partner, was unsuccessful, as the email provided on its website is inactive to receive messages.

 

Ills to the law

In an interview, Tijanni Sani, a public analyst decried how political figures in government have failed to uphold cardinal principles of the public procurement law due to what he described as pursuing their ‘selfish interests’ when awarding contracts.

“Plan and manage for great results. Identify what you need, including what broader outcomes should be achieved, and then plan how to get it. That is the simple basis of the law.”

He described the project as a political concept of the initiators without a clear intention to benefit the public. He pointed out how the bureaucratic nature inherent in the law has been used by the authorities to either delay the process of execution of the project.

“For me, the law was meant to solve this but it has been turned around to be the tool for their corrupt tendencies.” Sani however advised that the country’s procurement law should be reviewed and made less cumbersome so that the operators could no longer hide under the unnecessary ‘covers’ to perfect their corruption.”

This investigation is supported by the John D. and Catherine T. MacArthur Foundation and International Centre for Investigative Reporting.

 

 

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