Contracts for "Ghost Companies" Cost Nigerian Power Sector US$750 mil.

Power-Sector Corruption

An investigative committee, which was established under the present government of President Umaru Yar’Adua to launch a probe into the whereabouts of missing funds ostensibly used to rehabilitate Nigeria’s moribund power sector, has revealed its findings. Having conducted a series of interviews with ministers who served in the Energy Ministry between 1999 and 2007, the panel, headed by chairman Ndidi Elumelu, has delivered its verdict in which it has found that the government under erstwhile leader Olusegun Obasanjo awarded over 6 billion naira (US$750 million) to 34 companies that were not registered with the Corporate Affairs Commission (CAC) during the tenure of Governor Segun Agagu as minister of power and steel. The damning discovery shows that the former administration made the payments to 34 fictitious companies, some of which bore names such as “Special projects”, “Space master”, and “Sassy fund”. The companies ought to have filtered through the CAC for registration, but, in a letter from Dominic O. Inagyan, the deputy manager of the commission, there appears to be no indication that those companies that were the supposed beneficiaries of the funds were actually registered. This revelation has been denied by the last minister of power, Senator Livel Imoke, who maintains that all projects were subject to due diligence checks, while Olusegun Agagu, who served as minister of power and steel from 2000 to 2002, sought to deflect attention away from any wrongdoing by saying that a minister “is not a member of the tenders board…The tenders board recommends and I approve”, ThisDay reports. While the findings of the investigating panel are an embarrassment for the Energy Ministry, in particular, the banking sector has faced criticism for its involvement. However, Central Bank Governor Charles Soludo told the committee in his testimony that for the period under review, the Central Bank (CBN) only paid out a small proportion of the total sum to the government and that, in any case, the CBN merely approves the mandate from the government and sends it back to the Accountant-General for approval.

Vanguard newspaper reported the Acting Director of the Bureau for Public Procurement, otherwise known as Due Process, as saying "the government lost a lot of money and that was why Due Process was established. People were protected when they went wrong, but President Yar'Adua has signed a new law which ensures jail term for up to five years when found guilty".

Outlook and Implications

ThisDay reports the Nigeria Labour Congress (NLC) has asked the National Assembly to ensure that all people and corporate entities found to have been involved in any form of financial malpractice in the power sector are punished no matter how highly placed. The congress, in a statement signed by its general secretary, John Odah, said it was shocked by "the heart-breaking revelations about the level of willful negligence, subversion of due process, and even criminality associated with the administration of the power sector by the former president and his line ministers."

Meanwhile, domestic newspaper The Daily Trust reports that three governors as well as a former minister of finance during general Sani Abacha’s military junta are scheduled to testify before the House of Representatives Committee on Power and Steel. Mohammed Danjuma Goje of Gombe State, minister of state for power from 1999 to 2001, Namadi Sambo of Kaduna, and Dr Mu'azu Babangida Aliyu will face the committee’s questions regarding the spending of US$16 billion on the power sector by the administration of former President Olusegun Obasanjo, which failed to result in substantive progress being made.

It is well documented that billions of dollars have been lost from Nigeria's oil industry over the decades, but the recent revelations regarding how the country has been ripped off to the tune of hundreds of millions of dollars in the power sector have sent shockwaves throughout the nation. The news comes at a time when Nigerians have to contend with near-zero power supply. The country's power-generation capacity is falling below 2,000MW; a risible amount of electricity for a population of 140 million. President Yar'Adua has set up a task force to tackle the many issues affecting Nigeria's power sector and is demanding that 6,000MW be added to the national grid within 18 months.

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