Manitoba: Knocks and more knocks after expiration of contract
• While Government Plans More Sustainable Transmission Alternatives
A combination of factors, including the firm’s own seemingly low capacity to deliver on its mandate, poor funding and political support, may have been some of the limiting factors that characterised Manitoba Hydro International of Canada’s stint as management contractor for the Transmission Company of Nigeria.
Previous performance checks by government had accused Manitoba of failing to live up to some of its performance indicators.
At the expiration of their management contract at the Transmission Company of Nigeria (TCN), and with no indication of government’s willingness to give it another term, Manitoba Hydro International (MHI), has handed over the management of the company to their Nigerian counterparts.
And as Manitoba’s contract officially ended last week, government wasted no time in allowing the TCN slip back into control by Nigerian managers, pending when it releases its own template for the utility.
The firm’s three-year contract to manage TCN’s transmission, system operation and market operation undertakings was to expire in July 2015. But the Federal Government renewed the contract for one year amidst protests in some quarters.
The firm said the grid capacity has grown to 5,200 megawatts from 3,200mw when it took over, but a 2014 assessment done by government had indicated that Manitoba performed below expectation.
But government has not hidden its dissatisfaction with the company abilities. In fact, former Minister of Power, Chinedu Nebo once described Manitoba’s profile as over hyped. “This clearly means that a group of businessmen are merely using the MHI name and probably paying royalty. No wonder most of them are recruited from Asia and have not had a touch of MHI Canada before coming to Nigeria,” a stakeholder pointed out.
The Guardian learnt that the Manitoba Management Contract was never fully implemented. Poor funding to strengthen and expand the transmission network was a reoccurring issue. The board for TCN was delayed in being constituted by the previous government, affecting the take off of the contract. When the board was eventually constituted, a combination of alleged interference from the Ministry of Power, poor funding and in fighting even in TCN itself commenced.
Manitoba was to transform TCN to be technically and financially efficient and capable of evacuating the maximum capacity of energy generated. The MC is to be supervised by the Board through a clearly defined Scope of Delegated Authority.
MHI submitted 18 milestone reports that were meant to establish the framework for transforming TCN and carry out numerous activities with the objective of repositioning the company. But since the engagement of Manitoba, it was learnt that interference from the Ministry of Power also affected its capacity to run TCN according to contract. Following the dissolution of Boards by President Muhammadu Buhari last year, the corporation has remained without a board.
TCN is described as pivotal, in view of its role of wheeling power from generation companies and delivering it to the DISCOs for sale. The entire power sector and privatization process relies on a professionally operated TCN.
Executive Director of the Association of Electricity Distributors (ANED), Sunday Oduntan, recently accused the TCN of not doing enough to boost wheeling of electricity. He urged government to concession the corporation for effective delivery.
Oduntan said: “On transmission, I will like to seize this opportunity to plead with the Federal Government to do something about the TCN. The electricity we supply depends on whether the power was generated and transmitted. For example, Kano DISCO gets a daily 8per cent of energy generated. But kano has never gotten over 5 per cent, because TCN does not have the capacity to wheel the power from point of generation to Kano. If people don’t have power supply in Kano they blame Kano DISCO, but it is not their fault. However, this new minister is trying to get some things done. The transmission infrastructure needs to be expanded so that when much is generated they can wheel it.”
Indeed, after four years on the contentious management contract for the Transmission Company of Nigeria (TCN), Manitoba Hydro International of Canada has ended its stint with Nigeria. The contract, which was initially awarded by the Jonathan administration for a term of three years was renewed in July last year by President Muhammadu Buhari for another year.
But Manitoba insists that it had done its best to bring TCN to world class standard. Manitoba said it reduced the transmission loss from 13 per cent to eight per cent, which has saved the country N35b. The firm also claims that contract sum of N1.4b annually in the last four years is far less than the amount it had saved the country. It claimed that system collapses also reduced from 22 in 2013 to six in 2015, it said.
A factsheet from the Manitoba said the contract ensured the capacity increase of 5,200 megawatts (mw) from the 3,200mw it met in 2012, and the wheeling of 5,074mw in February 2016. The company said about 700 Nigerian employees were been hired and that it had developed job descriptions and management plans for them.
“Under the management of MHINL, is the engagement of PWC auditors to audit the accounts of TCN, for the first time ever, since its inception in 2006,” the document said.
In a statement confirming the end of Manitoba’s contract, TCN’s General Manager (Public Affairs), Seun Olagunju, said the new management acknowledged the contributions of MHI to the growth of the company.
She assured that all contracts and agreements entered into by TCN in the period remain valid and all financial obligations from development partners are still intact.
TCN further noted that during the four year MHI management period, their Nigerian counterparts, who now constitute the new management team, worked closely with the 8-man MHI team and were well equipped to properly administer the affairs of the company.
The statement noted: “At a brief handover ceremony, the Deputy Managing Director of TCN, Dr. Abubakar Atiku thanked the outgoing MHI staff for their contributions to TCN during their stay and on behalf of the new management team, affirms TCN’s preparedness to work with the Federal Government of Nigeria to further strengthen and increase the capacity of the nation’s transmission grid.”
It is not immediately clear what government’s next plan for TCN is, though Minister of Power, Works and Housing, Raji Fashola, recently hinted at a possible unbundling option.
The distribution companies have also called for the utility to be concessioned.
On their part, the nation’s electricity generation companies said the current transmission infrastructure of the Transmission Company of Nigeria (TCN) remains a threat to the safety of their operations and equipment, despite Manitoba’s stint.
Rather, they want government to invest substantially into the transmission network and upgrade its capacity to an equal level with other value chains of the power sector.
The utilities highlighted how continued underperformance was impeding the sector’s growth, and called for quick solutions to the development.
“The GENCOs use this opportunity to send an SOS in respect of transmission infrastructure, particularly as it relates to the safety of our operations and equipment. There is a need to significantly invest in the transmission sector in order to ensure an equal level growth across the industry.
“As it stands now, the generating sector has already witnessed a mishap due to inadequate transmission infrastructure, which has cost damage to generating equipment valued at billions of naira,” the statement said.
Pressure had been on government not to renew Manitoba’s contract. Two months ago, the House of Representatives Committee on Power recommended the non-renewal of Manitoba’s management contract.
The legislators said Manitoba failed to achieve its objectives and should be discontinued upon its expiration. Citing the firm’s alleged failure to execute its terms of engagement, the Human Rights Writers Association of Nigeria (HURIWA) last month called on the Presidency not to renew the management contract it government entered into with Manitoba Hydro International of Canada for the Transmission Company of Nigeria (TCN).
In justifying its call, the human rights group made copious reference to the firm’s alleged failure to turn TCN into a world-class transmission company as it promised.
HURIWA said it made the call on behalf of 26 civil society groups. National Coordinator of HURIWA, Comrade Emmanuel Onwubiko, said Manitoba had performed abysmally and allegedly breached all the terms of engagement.
According to Onwubiko, “The Federal Government’s objective in hiring MHI is to improve the skills and inculcate best practice in Transmission Service Management and to co-ordinate effective leadership skill to staff of TCN; and to bring to bear ‘world’s best practice in the management of power transmission business.’
“This was a welcome development to majority of serious minded Nigerians and some staff of TCN, as it was seen as an opportunity to work and interact with the acclaimed Manitoba Hydro International experts. It was also believed that the experienced staff of MHI Canada, would be seconded to TCN to effect this international touch, which would culminated into world’s best practice.”
The group described the company’s promise as a mirage.
It noted: “Firstly, it has come to bear that Manitoba Hydro International did not send any of her experienced staff to TCN as MHI in Canada claimed that they are not part of the Management Contract. This clearly means that a group of businessmen are merely using the MHI name and probably paying royalty. No wonder most of them are recruited from Asia and have not had a touch of MHI Canada before coming to Nigeria.
“The government was in a haste to award the contract without due diligence, believing that the so-called MHI’s presence in TCN would attract investors, but how many have come at the instance of MHI. It is on record that there was no fit-for-purpose interview/test carried out to check the academic qualifications and requisite experience of the MHI who came to lead Nigerian Engineers. In almost every country, if you are not a registered engineer, you will not be allowed to work in an engineering firm as a management staff. In Nigeria, without due regards to the Professional Bodies regulations, the authorities employ foreign professionals. Most of them come in with forged credentials, knowing that they would not be checked or their claimed qualifications crosschecked and investigated.”
HURIWA alleged that no security checked was carried on the staff of Manitoba, especially given the prevailing global security threats.
“ It is not safe for the country to allow frequent easy entry and exit by un-identified foreigners who have unimpeded access to the national grid layout. The consequences may be grievous to the national security,” HURIWA said.
On the qualification of the ousted management staff of the firm, the statement added: “The present MHI CEO at TCN, Mr. Mac Kast is over 70yrs old and knows next to nothing about engineering profession. He is said to be an Accountant. The one that left before him, Mr. Paul Stefisyn, is an OND certificate holder –spreadsheet analyst and not a technical person. When this came to the open, MHI quickly asked him to resign. Is this not a big insult to a great nation like Nigeria with the largest transmission network in Africa, a country with so many engineering professors and very many knowledgeable engineers? Except one of them, the remaining seven are well above 67yrs of age showing that they are retirees who have been spent elsewhere. Due to age and ill-health one of them moves with walking-stick, but was smartly dissuaded by his colleagues to do away with the walking stick.”
Onwubiko went on: “ It is a verifiable fact that in their first three years, MHI had their entire staff turned over about five times and the average stay of each staff is about four months. Each of them travels outside the country every month.
“Most absurd is the lack of the KPIs to appraise their performances. NERC says it does not know the KPIs upon which the 4th year renewal of MHI contract was based. Enquiries revealed that MHI was given free hand to choose their KPIs. This means there was nothing serious prompting the contract in the first place. Maybe the BPE will tell Nigerians better.”
In the meantime, the Minister of Power, Fashola, has hinted that the Ministry was constantly receiving expression of interests from people who want to invest in transmission grid expansion on a Public Private Partnership basis (Build Operate and Transfer).
He said government was open to the offers, noting: “We are open to it. But we recognize the need for assurances of recovery.”
He said he had challenged the experts to come up with proposals about how expansions could be done modularly, while still being interconnected to the main grid.
His words: “In this way we can have state expansions, or regional expansions that though connected to the main grid can be ring-fenced for recovery and accounting purposes, ”adding that this is now being done, not by consultants but by the nation’s civil servants.
Noting that the major problem in the area of transmission was that the transmission capacity was not developed to cope with the generation capacity, Fashola said apart from the plans to identify about 47 transmission projects that could be completed this year to deliver 1000 MW more carrying capacity, the Ministry has resolved and has started working on actual numbers of how many transmission towers would take the nation to 7,000, 10,000, 13,000, 16,000 and 20,000MW in each growth plan.
According to the Minister, “the roadmap to sustainable transmission requires that the five-year 20,000 MW plan must have an implementation programme. I liken the transmission part to a transport business; and every transporter must understand that there must be enough buses to move passengers, and he must bridge shortfalls by getting more buses. A situation where power generation installed capacity is in the region of 7,000 MW and the transport system is in the region of a 5,000 MW, carrying capacity is not sustainable.”
Saying the number of tons of steel required in the implementation of the plan must also be factored in, Fashola added: “Beyond that of course, we will secure the right of way, the way leave issues, compensation claims and build a programme that takes care of these issues to ensure that implementation is not frustrated by court cases or outright destruction of Transmission towers as we have experienced before. This seems to me to be the road to sustainability.”
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