• Wednesday, May 22, 2024
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Geometric Aba delay: This is our story, by Interstate Electrics

Geometric Aba delay: This is our story, by Interstate Electrics

INTERSTATE Electrics Limited, core investors in the Enugu Electricity Distribution Company (EEDC), has dismissed suggestions that it played any role by itself or in company of others to frustrate the completion and commissioning of the Geometric Power Plant in Aba.

In a statement to BusinessDay, a director of the company, Tockukwu Odukwe, said: “At no time did Interstate Electrics Limited or Sir Emeka Offor, directly or indirectly, make any attempt or take any action to adversely influence Geometric Power project.

“On the contrary, Interstate Electrics Limited, through Enugu Electricity Distribution Plc, encouraged and offered support to Geometric to realise the power plant project by offering to purchase electricity from Geometric whenever its plant comes on board and to pay for use of the power lines and substations it had previously installed to ensure that the investments they made did not go to waste but Geometric turned down the offer insisting on taking over the Aba and Ariaria Business Districts of EEDC, which Interstate had duly paid for and was already operating.”

Interstate dismissed allegations in a BusinessDay publication that Interstate Electrics Limited, the core investor in EEDC; Emeka Offor, chairman of EEDC; Namadi Sambo, former Vice President; Pius Anyim, former secretary to the government of the Federation; Sam Amadi, former chairman of Nigeria Electricity Regulatory Commission; Benjamin Dikki, former director general, Bureau of Public Enterprises (BPE); and Mohammed Bello Adoke,former Attorney General of the Federation, worked in concert to frustrate Geometric, calling the claims false in every material particular.

Interstate stated that when Geometric Power Limited signed a Memorandum of Understanding with the Federal Government on May 11, 2004 for Geometric to provide emergency power to be added to the national grid, there was no mention of Aba-Ariaria ring fenced in the deal. It said Geometric created a sister company Aba Power Limited, which entered into power distribution and lease agreement dated April 28, 2005 with the Federal Government and then the National Electricity Power Authority (NEPA) for the purpose of the power to be generated by Geometric, initially designated to be supplied to the national grid, to now be supplied to Aba town comprising Owerinta, Osisioma, Ogbor Hill, Factory Road and Port Harcourt Road using NEPA infrastructure.

Interstate described as invalid the “power distribution and lease agreement and supplemental agreement purported to have leased the assets of EDC to Aba and Geometric Power Limited and Aba Power Limited.”

According to the company, the lease agreement made between NEPA and Geometric was made and executed on April 28, 2005 after the repeal of NEPA Act on March 11, 2005. “The Supplemental Agreement dated 31 August, 2006, cannot amend the Lease Agreement of April 28, 2005, which is an invalid agreement.”

Interstate insisted that “Geometric Power was in breach of the defective Lease Agreement by failing to distribute power to the ring-fenced islands within the stipulated period and failed to pay any annual charges as provided in the agreement.

“The Lease Agreement was in violation of provision of The EPSR Act 2005, and Electric Power policy which prohibits a person who is engaging in power generation undertaking from engaging in power distribution.”

The company said BPE never countered this position throughout the bidding process neither did Aba Power, which participated in the bid processes through Eastern Electrics.

The statement said: “Geometric and Aba Power Limited later went to court seeking to stop the handover of Aba-Ariaria ring fenced area to Interstate Electrics Limited which pended in the courts until the final settlement in November 2020. “Interestingly, the key settlement term required Geometric Power and Aba Power Limited to refund Interstate Limited, the amount they (Interstate) paid for the assets chase Price by a Preferred Bidder as contained in the RFP (Request for Proposal) that guided the transaction was that BPE has to give approval to the funding scheme of the Preferred Bidder of EEDC within the Aba Ringfenced Area, underscoring the veracity of Interstate’s claims to the area. In other words, Geometric Power and Aba Power Limited acknowledged that they did not pay for those distribution assets and that in fact, Interstate Electrics Limited actually was the party that paid the government for those assets. “It is pertinent to note that Prof Barth Nnaji, the promoter of Geometric Power and Aba Power, was the Minister of Power from 2011 to 2013 when the power privatisation processes took place and indeed superintended the power sector privatisation processes. He also chaired the Presidential Task Force on Power and was meaningfully influential in the National Council on Privatisation that made key decisions on the privatisation processes.

He was thus in strong position to exclude Aba and Ariaria Business Districts from the EDC coverage area slated for privatization if there was indeed cogent substantive and sustainable agreements that effectively ceded those Business District to Geometric Power and Aba Power.

“Regarding the allegation that Interstate failed to meet the August 21, 2013 payment deadline and that the rules were bent by the Sambo-led NCP” the facts are as follows: one of the conditions precedents for payment of the Pur“In that regard, Interstate duly wrote to BE in July 2013 requesting its approval of Interstate Electrics’ financial arrangements with African Export Import Bank (Afrexim). When it did not receive any response from BPE, it further wrote a reminder and still got no response. “As it were, being a critical document to the lender, Afrexim Bank was unable to disburse the funds for payment to BE without the necessary approvals.

To underscore how critical the approval was and why it was a condition precedent, it is the approval that the Lender needs to take over the shares of a defaulting borrower as was applied in the case of Fidelity Bank in Kano, Kaduna and Benin Discos and UBA in Abuja Disco. “Consequently, when Afrexim Bank declined to disburse the funds for payment to BPE for noncompletion of documentation, Interstate Electrics Limited wrote to BPE invoking the clause on that condition precedent which allowed Interstate to give BPE 14 days within which to meet the condition precedent which BPE eventually complied with by approving the Interstate’s funding arrangement and Interstate made the payment subsequently. “No rules were bent.

The payment process and procedures complied with the terms of the RFP. If anything, the Sambo-led NCP should be commended for upholding the rules of the transaction. From the foregoing it is clear that Geometric had the unfettered opportunity to build its power plant and commence distribution of electricity in the Aba Ring fenced area for over 8 ears before the privatisation of EDC and subsequent takeover of EEDC by Interstate Electrics Limited, a period long enough for Geometrics to have developed its generation plant and distributions network. “Interstate only exercised its rights over assets it duly paid for with the knowledge and active participation of Aba Power Limited.

“Furthermore, the disagreement between Interstate/EEDC and Geometric Power and Aba Power Limited lasted for only 30 months (two and half years) when the parties formally negotiated and signed a Term Sheet in March 2016 which brought the dispute to an end, out of the 20 years it took Geometric to realise its project. Also instructive is the fact that it took another 8 years from March 2016 after settlement with Interstate Electrics Limited for the project to be commissioned.”