Fashola brokers peace between Prof. Barth Nnaji and Emeka Ofor over Aba power project

Minister of Power, Works and Housing  Mr. Babatunde Fashola, on Thursday presided at the 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, Mister 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 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 the dispute that 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.

“A lot of things will happen like l explained 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 and so for me 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 dollars into the region can feel save,” he said.

BACKGROUND TO THE CONFLICT

On May 11 2004 Geometric Power Limited (GP), Prof. Barth Nnaji is a key stakeholder,  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.

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, with Chief Emeka Offor as a key stakeholder, 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,

– delayed FGN’s commitment to improve electricity rapidly.

TERMS OF RESOLUTION

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.

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