How Sahara Energy fraudulently acquired Egbin Power Plant

Source: pointblanknews.com

Fresh facts have emerged as to   how Sahara Energy,  an oil services company, fraudulently acquired the biggest power plant in Nigeria at Egbin, Ijede, in Lagos state.

Sahara Energy, owned by Tope Shonubi, Tonye Cole,  and Ade Odunsi, is one  of the big players  neck deep in the large scale fraud in the oil sector. The trio  benefited immensely from former petroleum minister, Diezani Alison-Madueke sleazy administration.

Pointblanknews.com learnt that the  $1.2 Billion asset was purchased for a paltry sum of $470 million with the connivance of some rogue officials.

General rule of thumb, according to our source,  is a million dollars per megawatt hour, and for Egbin with 1320MW installed capacity and with potential to increase capacity to 2000MW, the asset should have been valued north of $1.2billion.

This does not take into account the housing estate, private school  and vast land claimed by Sahara to be part of the sale.

Investigators said Sahara Energy made over $2Billion from the Oil swap deal alone.

NNPC had requested Sahara Energy, with it's Switzerland subsidiary, Sahara International Pte Limited at 7, Quai du Mont-Blanc, Geneva to refund N6.034 billion ($37.55 million) of subsidies unless a 'credible explanation' can be provided on the subject it oil swap transactions. They never did.

A Swiss report stated that Sahara Energy is entirely unable to justify a bank statement showing another $33.7 million while it is among the companies that have not imported the quantities that they should have but who have nevertheless been able to continue their importing activities with flagrant impunity.

Sources hinted Pointblanknews.com that by  2006, the Olusegun Obasanjo administration chose to contract the services of Marubeni to rehabilitate some of the plant's boiler units.

Marubeni was believed to have submitted a quote of $47 million to repair two boiler units. But before the contract could be awarded, Korea Electric Power Corporation (KEPCO), which owned a similar Korean version of the plant in Seoul, South Korea, made representations to the federal government to repair the same units at a significantly lower cost of $24 million.

According to informed sources at Egbin, KEPCO had been brought to the country by local energy company, Energy Resource Limited, the power subsidiary of Sahara Energy which also served as its Nigerian partner.   Both companies did not submit quotations for similar repairs. Marubeni opted to change some boiler units completely while the Koreans opted to “reworking” the existing boilers.

In the process of rehabilitation, it was further gathered,   the project cost was revalued upwards to over $28 million, due to the high learning curve required by the Koreans in trying to understand the Japanese technology.

Industry sources revealed further thst during the rehabilitation process, the government then had a change of heart, turned around and sold the 70% of the plant to the consortium of KEPCO and Sahara at a cost of $280 million with an initial deposit of 10 per cent of the total cost, that is $28 million, which was the cost of the repair for rehabilitating two boilers excluding the turbines, generators and other ancillaries.

  However, based on outcry by the PHCN Senior Staff Association (SSA) and the National Union of Electricity Employees (NUEE), a revaluation was done, valuing the plant at $560 million.

The revaluation increased the amount due from consortium from $280 million to $403 million. Further revisions were done by Bart Nnaji and the final price was settled at $457 million dollars.

The Egbin Power Plant was sold on the basis of a willing buyer and willing seller basis while all the other power plants were sold via bids from various investors.

The intended sale was not announced to the potential investors thereby making the transaction less than transparent.

Benchmarking the sale Egbin to the rest of the other generating plants sold, you will notice that price paid for the generation capacity as of the time of sale defers significantly from the other assets.

Ugheli Power had only 183MWs available as of the time of sale with 875MW installed capacity, and the winning bid was $383 million dollars; whereas, Egbin had 400MW available at the time of sale with 1320MW installed capacity, and the amount paid for the asset was $470 million dollars.

Also, the NERC rule specifically dictates that no distribution company should own more than 20MWs of generation.

The Sahara group via KEPCO Energy Limited owns majority shares of both the Egbin Power Plant and Ikeja Distribution Company. Do understand that these rules were put in place to protect the country.

Owning the largest power plant and distribution company in the country definitely poses a national security risk and could be used as economic sabotage if and when the company is negotiating with the Government.

This is evident with the numerous threats made by Sahara to NERC that it will refuse to pay the Bulk Trader collections from its Ikeja Disco if Egbin is not paid in full. Actions like this could severely hamper the privatization process.

This transaction has been on the fore front of many allegations including a petition about this transaction submitted to the EFCC in December 2007 but never followed up upon.

Commissioned in 1985, at 1,320MW, Egbin is the largest power plant in the country.  It comprises if six 220MW independent gas-fired steam turbine units that can also run on heavy oil (HFO).

Built by foreign loans made available by the Government of Japan, the plant was constructed by power and engineering company, Marubeni Corporation, and was maintained on behalf of the National Electric Power Authority under a technical licensing agreement by Hitachi.  The Japanese also made available two additional bays (7&8) ready to add two more units for future expansion to 1,740MW.

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