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How PDP scuttled Tinubu’s IPP project, cost Nigeria $11m court fine, By Kehinde Bamigbetan
The Peoples Democratic Party of, PDP and its presidential candidate, Abubakar would wish to sedate Nigerians or at least put them under a spell of amnesia that would make them forget the past.
Why? Only voters who are ignorant of PDP: an anti-people pedigree or have forgotten its
reckless abuse of power could imagine putting their thumb beside its logo in the forthcoming general elections.
In 1999, the PDP was elected to fulfill its promise to improve the welfare of Nigerians and their progressive development. However, with Olusegun Obasanjo as president and Abubakar Atiku as vice president, PDP spent more time settling political scores to the detriment of progress and development.
Lagosians had elected Bola Ahmed Tinubu, an auditor who finished cum laude at the Chicago State University, United States, and was the Treasurer of Mobil Nigeria Limited before venturing into partisan politics.
Tinubu’s party, the Alliance for Democracy, had exposed Obasanjo’s lack of popularity in his southwestern base by winning the legislative and executive seats in his home state, Ogun, and other states in the southwest.
The PDP, propelled by the thirst to teach the South West a lesson soon found an excuse to abuse its power.
Lagos, Nigeria’s industrial and commercial capital, had been in the throes of a chronic energy crisis since the 90s as more industries found it hard to raise output because of the dire shortage of power.
During his campaign for governorship, Tinubu consulted with manufacturers and assured them that he had the magic wand to solve their critical problem. Between his electoral victory and swearing -, he set in motion the process to fulfill his promise by contacting Enron Energy Company, an established global institution for building and running independent power plants.
The deal was to run in three phases. In the first phase, barges would anchor at Egbin from where they would provide the immediate power needs of industries. This would set the pace for the second phase which would entail the construction of a power plant and a gas pipeline that would off-take gas from the Niger Delta.
As at this time, the flaring of gas had become an environmental hazard to the Niger Delta and oil firms were under pressure to market this resource that was wasting. It was a win-win situation. With gas, Enron would power the plant to produce energy.
This led to the third stage, Enron would sell the 290 megawatts of power independently produced to industries willing to buy it.
imagined it: with more electricity, industries will recruit more workers to increase output and reduce the army of the unemployed, mostly graduates, roaming the streets of Lagos.
Considering the economic importance of Lagos to the country, Tinubu expected the PDP to see the Independent Power Project he pioneered as a solution all patriots should embrace. The Ministry of Power and Steel on behalf of the Federal Government was the consenting party. If it was successfully executed, it would boost the country’s economy.
In tune with the visible excitement of industrialists and Lagosians, Enron set up a special-purpose vehicle, Enron Nigeria to execute the project’s first phase. The barges were shipped to Lagos and arrived at Snake Island port. They were later moved to Egbin opposite the power generating facility of the Power Holding Company of Nigeria for coupling. The press was agog with the celebration. Tinubu is a promise keeper.
But the killjoys of the PDP were working night and day on how best to scuttle a solution they couldn’t imagine or make happen.
On December 15, 1999, the PHCN wrote to Enron announcing its decision of the PDP- led Federal Government to suspend the project. The letter said the government has decided to make the project “inoperative”.
Shocked that a federal government could,
for partisan sentiments, stop a multimillion-dollar investment to solve a chronic power shortage in its industrial capital, officials of Enron Nigeria tried in vain to convince the government including an explanation that the bankruptcy of its parent body in the USA would not affect the prospects of the project, being a special purpose vehicle.
Realizing that the PDP- led Federal Government was adamant, Enron Nigeria decided to cut its losses. First, it sold the barges to AES energy company and facilitated the AES deal to sell the generated power to the PHCN to feed the national grid. The strategy of the PDP was to ensure that Lagos was denied the direct allocation of the power to the industries within its territory to frustrate Tinubu’s agenda and ensure that the second phase of the project, which was a build and operate energy facility targeted at the private sector and relying on piped gas power did not see the light of day.
One of the efforts made by Enron Nigeria to discourage the PDP administration from turning oppression of Lagos State and its citizens to state policy is the letter to the Federal Government on November 21, 2005.
It alerted the Federal Government of its intention to “seek recovery for its injuries to the fullest extent, permitted by the applicable law.” In that letter, the Claimant also stated that whilst “it has been ready and eager to carry out its commitments under the PPA,… the Purchaser has not established the security Letter of Credit concerning Phase IP’, and that neither the First nor the Second Respondents “have undertaken the actions specified in the PPA that would permit ENPH to proceed with the development of Phase II…”.
After five years of efforts to make the PDP- led FG reverse its posture, Enron Nigeria decided to sue the government at the International Chamber of Commerce in 2006 and claimed costs for what it lost or could have gained if the Federal Government had not defaulted on the agreement to build the power plant in the second phase of the project.
The tribunal that tried the case comprised Julian D.M. Lew as president, Robert HH. Smit and Tinuade Oyekunle as co-arbitrators. The proceedings were held at
Barrister Berwin Leighton Paisner represented Lagos State, the first respondent, and Professor Fidelis Oditah, Queens Counsel and Senior Advocate of Nigeria represented the Power Holding Company of Nigeria, PHCN, and the Federal Government of Nigeria, the second and third respondents.
The claimant, Enron Nigeria Power Holding Limited was represented by Clifford Chance LLP.
The hearings took place at the IDRC, 70 Fleet Street, London, EC4Y 1EU, United Kingdom.
The tribunal made three awards. Delivering the award of liability on December 9, 2008, the tribunal ruled that “that Power Holding Company of Nigeria Plc (the Second Respondent) had breached Clause 3.2 in relation to Clause 3.1 (ix) and Clauses 3.1 (xii) and 14.3, and Clause 1.6 of the Original PPA, and that the Federal Republic of Nigeria (Third Respondent) had breached Clause 3.2 in relation to Clause 3.l(viii) and Clauses 21.10(iii) and 1.6 of the Original PPA.”
The tribunal’s second award, which dealt with remedies, was delivered on February 28, 2011. It was another international embarrassment for Nigeria as the tribunal ruled that “The Claimant (Enron Nigeria) is entitled to recover expectation or reliance damages against the Second and Third Respondents as a consequence of the Second and Third Respondents’ breaches of the Original PPA.”
The final award, which focussed on the quantum, reads:
“(iii) In this Award on Quantum the Tribunal has determined that Second and Third Respondents shall pay to Claimant US$ 11,220,000 as damages for its loss of chance due to Second and Third Respondents’ breaches of the Original PPA”
This verdict was delivered on November 19,2012 exposing the PDP- led administration of President Goodluck Jonathan to global ridicule and the Federal Government, still struggling with the economy, to unbudgeted financial commitments. Nigeria is still struggling to pay the debt.
It is this same Lagos that the PDP did everything to destroy that it now seeks to rule.
As we prepare for the general elections, voters in Lagos State and Nigeria must recognise that a leopard won’t change it’s spots. Voting for Asiwaju Bola Ahmed Tinubu, the man who made sure that Lagosians survived the annihilation of the vengeful, oppressive, vindictive PDP is the sure guarantee of a better and more prosperous Nigeria.
Bamigbetan is the chairman of, the APC-PCC Media & Publicity Committee for Lagos State
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