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FORMER President Olusegun Obasanjo has explained the reasons behind the waiver of due process, saying it was to avoid unnecessary delays in prosecuting the project. He gave the reasons in his presentation to the House of Representatives Committee on Power and Steel, an advance copy of which was made available to the News Agency of Nigeria (NAN) yesterday in Abuja.

The former President explained that all power projects went through due process except on payment certificates. He said the idea of due process was to check on competence, prices, or cost and projects were issued with due process certificates.

Power projects were exempted from due process payment certificate since they were not on normal annual budget but special provision from excess crude, Obasanjo said. He said that the fund for the projects were available and, therefore, there was no need to cause further delay in payment for such an urgent project where any delay could be costly in human discomfort and inadequate power supply to industries.

“The first set of invoices by contractors was delayed in due process office for almost two months — an unnecessary delay which was holding up progress,’’ he said. He told the committee that after consultation with governors, chairmen of local governments and the National

Assembly, it was agreed to finance power projects from reserve of unallocated oil revenue since energy touches every life everywhere. “It was to be an investment contribution which is on the basis of revenue allocation formula and to be refunded when NIPP is privatised on the same basis of revenue allocation.

“At that time, everybody agreed and we moved to finance NIPP on that basis,’’ he said. Obasanjo said that in every case, to the best of his knowledge, all contracts for NIPP were based on open-publicly-advertised tender system except for the turbines where the four major producers in the world — GE, Siemens, Hitachi and Alshtom — were invited to submit tender.

He explained that GE was the cheapest with the best terms all round but particularly, including establishing a repair and maintenance centre in Nigeria. Obasanjo said that turbines which were custom-produced would only be produced when there was assurance of payment in form of down payment or irrevocable letter of credit.

According to him, the government policy was to pay the contractors only 25 per cent mobilisation fee. He said it was not the duty of the President to oversee such payment, saying, “you are all well aware of those whose duty it is to pay.”

The former President said if a contractor who had been paid mobilisation fee was not actively on site, it would be wise to find out what the problem was, adding that if it was established that it was not performing, the bank guarantee could be called.

Obasanjo said that for letters of credit, a contractor was not allowed to draw money until there was evidence of performance normally in the form of shipping documents which were negotiated between the bank of the client and that of the supplier.

On allegation of non-registration of companies or that non-existent companies were paid, he said these were not matters for the President but for appropriate officers in the relevant ministries.

“If this ever happened, there would have been a big syndicate racket that should be broken and all concerned prosecuted because monies are paid by cheques or letters of credit.

“Companies will not have bank accounts opened for them without evidence of registration and other documents authenticated. If the Committee has such a case, please ensure prosecution without delay,’’ he said.

He told the committee that international and multi-national companies like the suppliers of turbines did not necessarily need to be registered in Nigeria to carry out operations, directly asking for waiver if necessary or through their local representatives.

“I am, however, informed that the issue of unregistered companies has since been clarified and the committee has received evidence of registration of all the 34 companies,’’ he said.

Obasanjo said that while looking for solution to the country’s energy problem, “I visited South Africa where they depend heavily on thermal plant based on coal, generating in total 40,000mw and planning to spend 21 billion dollars in the next five years.

“We could not embark on coal generated thermal until we can produce coal locally and no private sector will be involved in coal or other solid mineral production unless there is assurance or expectation of reasonable return on such investment backed by necessary law, regulation and survey.

“The solid mineral bill lasted two years in the National Assembly. And no investor could be persuaded to come to invest in solid mineral when there was no law in place. “The law came in the last quarter of our administration,” Obasanjo said, advising that very serious attention could now be paid to thermal generation from coal.