Economic Confidential, June 11, 2009

News Update

FG Approves Another N348 Billion for Power Supply

The Federal Government has taken additional measures towards improving the power supply situation in the country. The Federal Executive Council [FEC] has approved and ratified nine contracts totaling N348 billion at an Extra-ordinary FEC on Power convened by President Umaru Musa Yar'Adua.

This was disclosed at a joint conference by the Minister of Power, Dr. Lanre Babalola and his Information & Communications counterpart Prof. Dora Akunyili after the Special Council on Power.

The contracts cover generation and distribution. They included the award of contract for the manufacture and supply of 20 number numerical relay testing equipment with accessories and software, plus factory acceptance test and training of two number transmission company of Nigeria engineers with delivery period of six [6] months for N46.4 million plus 994.660 Euros contract of Kainji 330KV substation, construction of 1x150 MVA, 3330/132KV substation at Kainji and construction of 2x30/40 MVA substation at New Bussa for N1.4 billion plus $14.9 million which when completed would reinforce the substations and contribute to system stability and improve power supply. Completion period is eighteen [18] months.

Other contracts are the construction of Ikorodu - Odogunyan - Shagamu 132KV double circuit line for N1.1 billion plus 8.9 million Euros completion period is eighteen [18] months as well as the contract for the provision of Ramp and Jetty at Imo River Bridge for the crossing of heavy lift equipment for NIPP projects for N1.9 billion, with the completion period of six [6] months.

According to Prof. Akunyili, the ratifications of the various contracts were based on the recommendations of the Presidential Steering Council on National Integrated Power Projects with Vice-President, Dr. Jonathan Goodluck as the Chairman.

There was also an upward review of a contract awarded to Messrs Rockson Engineering from $740.1 million to 970.3 million. Another upward review was the contract for the Niger Delta medium sized power plants EPC /BDP / for relocation of Sapele Power Plant project, adoption of "2" shape configuration and provision of 330KV x LPE underground cable from $120.6 million to $136.4 million. Completion period is nine [9] months.

Dr. Lanre Babalola explained that the upward reviews were necessitated by the delay in funding suffered by the projects awarded since 2005, which led to economic factors such as inflation, new exchange rates and pricing affecting overall costs.

In the same vein, the Minister noted that the projects will not only ensure the attainment of 6,000MW by 2009, and 10,000MW by 2011, but they are equally aimed at planning ahead as government is being proactive. He said contractors of high repute have been selected, and engaged to ensure performance in generation, transmission and distribution of power in the country. Expressing optimism, he said "no doubt, there are challenges, but they are surmountable, the high level of Federal Government's commitment, the huge resources committed and the execution of these contracts will lead to improvement in power".

It would be recalled that the Federal Government at the inception of the present Administration made power number one on its seven-point agenda in view of it's cardinality to the attainment of its agenda as well as vision 2020. The Special Council on Power is in recognition of its catalyctic effects on the macro economic development of the country.