TCN MD removal threatens power reforms, $1.66bn foreign funding – Forum
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By Chris Ochayi
The Nigerian Power Consumers Forum, NPCF, has called on President Muhammadu Buhari to immediately direct a reversal of removal of Managing Director of the Transmission Company of Nigeria, TCN, Mr Usman Gur Mohammed, saying the action would threaten $1.66 billion foreign donor fund the company has attracted to expand power transmission to 20,000 megawatts.
General Secretary of the Forum, Michael A. Okoh, said in a statement issued yesterday in Abuja, urged the President to reverse the action in order to save the power sector from the dictatorship that is engulfing it.
Okoh said the recent arbitrary removal of the TCN boss by the Minister of Power, Engr. Sale Mamman, defeats the objectives of due process in the federal government’s establishments and the overall objectives of power sector reform being championed by President Muhammadu Buhari.
“The minister in December 2019 summarily removed heads of agencies at the Nigerian Bulk Electricity Trading Plc (NBET) and Rural Electrification Agency, REA. These actions were reversed days after.
“He has turned a deaf ear and went on to repeat such costly mistakes again at TCN against a circular issued by the Secretary to the Government of the Federation, SGF, Boss Mustapha on applying due process to sanction heads of agencies. In the case of Mohammed, it was clear that he had done no wrong for the minister to remove him.”
Akoh recalled that TCN was already a crumbling block in 2016 despite federal government’s $32 million dollars Manitoba Hydro International, MHI, management contract to reform TCN.
With UG Mohammed at the top of affairs, the public utility firm has been reformed within three years and had attracted $1.66bn investments to expand TCN capacity to 20,000 megawatts (MW) by 2023 through the Transmission Rehabilitation and Expansion Programme (TREP) MHI managed TCN from August 2012 to August 2016 but failed to create any significant impact as the company was fraught with obsolete operations leading to it being the weakest link in the Nigerian electricity supply value chain.
The federal government began shopping for a reformist immediately after terminating MHI contract in 2016, and eventually found that reformist in Usman Gur Mohammed, brought it from the African Development Bank, AfDB, on a special request to serve Nigeria under the President Muhammadu Buhari’s administration.
AfDB released him on secondment as CEO to reorganize TCN which was badly mismanaged under the management contract. The special leave was granted to Mohammed through VP Human Resources and Corporate Services dated December 21, 2016. Mohammed had worked in the defunct NEPA/PHCN for 17 years and was involved in the Nigeria power sector reform which ended with the privatization of the 11 Distribution Companies, DISCOs, and six Generation Companies GENCOs.
He also participated in the preparation of the then Transmission Division of PHCN to strengthen it to effectively perform its role in a privatized power sector before I moved to African Development Bank in March 2009.
Dismisses claim of MD’s frustration
Last week, the Minister said he got approval from the Presidency to remove the MD of TCN, Mr Mohammed, saying he was frustrating the Siemens Presidential Power Initiative (PPI), among other allegations.
“We wish to state that the claim is not correct as the minister was also misled to say TCN was causing the loss of one billion naira daily in the power sector. N1bn is such a huge money that if the TCN infrastructure was truly responsible for this, the power sector would have collapsed since.”
“On the contrary, Mohammed repositioned TCN and it is evident as multilateral donors flood to invest with cheaper loans in TCN. Under the four years management contract of MHI, there was no single audit of TCN. The company could not raise a single dollar of investment during the period.
“A $300 million World Bank project inherited by MHI was severely mismanaged (out of seven major contracts for transmission rehabilitation and expansion only 2 were successfully after 10 years of implementation). MHI also bloated the management level staff of TCN from the then 10 General Managers and 11 Asst.
“General Managers (which was termed top-heavy by the Change Management Consultancy done by Red Electrica) to 46 General Managers and 134 Asst. General Managers in 2017, when I took over as CEO.
“But from 2017 when Mohammed assumed office at TCN, the firm which was the weakest link in the Nigeria power sector value chain was gradually transformed, raising transmission wheeling capacity from 5,000MW to 8,100MW, and recovering nearly 800 stranded containers to deliver scores of power transmission projects.
“Mohammed from 2017, worked seamlessly with the former Minister of Power, Works and Housing, Babatunde Fashola with his Terms Of Reference, TOR, to reform TCN. With the new organizational chart, General Managers, GMs, and Assistant General Managers, AGM, positions that were earlier abused, were reduced to 20 and less than 50 respectively.
“More than 70% of the bloated management structure has already been corrected as at when the minister removed him from office through a press release on May 19, 2020,” it noted.
The new TCN management also began workforce strengthening by obtaining approval from Fashola and the Federal Character Commission to recruit 200 fresh electrical engineers, and “Pupilage training is a scheme previously used in NEPA was cancelled under the previous management but which we reintroduced.”
“We are witnesses of the TCN management has done in the last three years with several media briefings that no one has countered.”
“TCN completed the 20 Year Least Cost Transmission Expansion Plan Study which was the first of its kind in the history of Nigeria. It conducted and delivered the 2012-2015 Audit of TCN which was carried out by PWC which made TCN attractive to multilateral donors that provide cheap and concessionary funding.
“Today is carrying out a 2019 audit which it hopes to complete by June 2020 consistent with requirements of Donors. The TREP with the objective of rehabilitating and expanding transmission capacity to at least 20,000MW in four years was developed and is in progress.
TCN has grown in-house engineers’ capacities
Under the strategy of Mohammed, he and his management empowered TCN engineers to install transformers and equipment in various substations.
“The unprecedented installation of 75 power transformers across the nation by January 2020 was largely achieved through this scheme. TCN engineers were achieving this at the rate of less than 10% of contractors’ cost and delivery time.”
It has saved billions of naira using the in-house engineers to complete power transmission projects. For instance, the Damaturu 330kV substation was achieved through this scheme.
It was awarded in 2006 at $10.5 and N405 million but was not done, but TCN engineers completed it and it has improved power supply in the northeast. Other projects are the 132kV Kukuaba substation in Abuja, Ilashe substation in Lagos, Awka substation, and Wudil substations.
How TCN attracted $1.66bn donor funding
The TCN management found that with the poor electricity market settlement in the power sector, the company may be unable to deliver critical transmission projects that will improve the power supply experience of Nigerians under the Buhari administration.
“As we speak, the company is owed over N450 billion in unpaid balances plus interest by the 11 DisCos. To implement TREP, TCN attracted concessionary funding from multilateral donors.”
The French Development Agency & EU Grant was $500 million dollars, World Bank gave $486 million, AfDB gave $410 million, JICA brought $238 million and a grant to deliver capacitor bank in Abuja, Nasarawa and Lagos; World Bank is bringing another $27m for the North Core Project.
All the projects totaling $1.661 billion except the North East Transmission Project which has been kept in abeyance until security improved are at various stages of implementation, because TCN now has the best implementation structure that has strengthened the confidence of these foreign financial institutions.
TCN reduced system collapses by 60% in 3 years
TCN under the supervision of Mohammed reduced the grid system collapses by 60 percent through the implementation of innovative strategies. Between 2017 and 2019 TCN ensured all GENCOs connected to the National Grid to put their machines on Free Governor Mode of Operations.
That was on zero compliance but is now over 95% compliance, which is the best in the history of Nigeria. TCN began championing the installation of a functional Supervisory Control and Data Acquisition (SCADA) and Electricity Management Services (EMS) under Mohammed.
Nigeria had signed three SCADA contracts in the past, and all of them failed. The last contract signed in 2007 financed by the World Bank amounted to $47 million and still failed.
TCN has devised a strategy of ensuring Nigeria achieves functional SCADA. The strategy included the cancellation of the non-performing Fiber Optic Concession contracts, rehabilitation of existing communication backbone and building new ones, training of TCN staff to ensure the success this time.
“This is worthy of commendation by any authority that ought to give backings for more successes,” Okoh noted.
TCN’s role in Siemens power deal
“Although the minister claimed that TCN never supported the Siemens Deal worth $2 billion to reset the power sector. That was not the case as TCN under Mohammed demanded to know what Siemens will offer to the company in terms of improvement.
“We will like to state clearly that, despite the initial disagreement over choice of technology and other issues for the Siemens project, we believe that TCN prepared its aspect of the project for the Minister to present to the President for approval. There are documents to that effect.
“TCN Management did not oppose the Siemens project. This is proven by how TCN prepared the final proposal which the Minister submitted to the State House on April 23, 2020,” Okoh noted.
Gains on the international front
Mohammed who has also been the chairman of the West African Power Pool, WAPP, recorded many successes in the international front, worthy of commendation even by the minister.
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He resolved the implementation bottlenecks of Ivory Coast-Liberia-Sierra Leone-Guinea Power Interconnection project and Senegal-Gambia-Guinea Bissau line which should lead to the interconnection of all the entire 14 West African land border countries.
The North Core Interconnection Project between Nigeria, Niger, Benin, Togo and Burkina Faso was launched in 2019, after it had lingered for seven years.
This project financed by AFDB, World Bank and AFD will construct more than 800KM of 330kV DC line and will help Nigeria to trade more electricity to those countries and earn foreign exchange.
Mohammed as WAPP chair also ensured successful liquidation of over $80m electricity trade debts between Nigeria, Benin and Togo and over $15m between Nigeria and Niger.
Reports say that over 70% of the recovered fund plus current bills were paid to NBET which used it to settle outstanding invoices of Genco’s.
Minister’s action truncated DisCos’ audit by DFID
TCN under the leadership of this same UG Mohammed, executed TCN/Transmission Interface study that established the investment requirement of Disco’s nation to be $4.3 billion (excluding investment at 415 low voltage power lines) through TCN in-house capacity.
This study was validated by an independent consultant supervised by NERC but paid by TCN. The MD of TCN partnered with the United Kingdom’s Department For International Development (DFID) on financing the forensic audit of the 11 DISCOs.
The recruitment of the big four international auditors was completed under Mohammed’s leadership and the project was expected to be launched on May 22, 2020, last Friday but was postponed after the Minister issued a press release, removing him and bringing a junior officer as acting MD.
Removal of agencies’ CEOs: SGF reminder to ministers, others in good faith
There have been a lot of reactions to the circular issued by the SGF reminding ministers and other executives that it was not proper to remove CEOs of federal agencies without following the proper disciplinary process contained in the Establishment Act and other rules guiding the federal civil service.
Mustapha had also issued similar warning to ministers and board of agencies in 2018 that they should desist from arbitrarily removing CEOs of their agencies.
“As reported by the media, rather than instituting processes at the Office of the SGF, the power minister chose to use the new Chief of Staff to get approval of the President for a letter he wrote to the late Chief of Staff to remove the hardworking MD of TCN, UG Mohammed.
“SGF who ought to direct the process was kept in the dark, and only the approved letter from the Presidency was given to the SGF. On top of this, they have pressured the SGF to issue a sack letter to Mohammed and a letter of appointment to the new person.
“They are not allowing the SGF to study the issue properly along with its implication on the Buhari’s administration, the power sector and the international community.”
Buhari should caution minister, reverse Mohammed’s removal
The Forum said, “We urge President Buhari to carefully look through the issue and cause a reversal of this back channel removal of the TCN head to save the company from becoming worse than the days of Manitoba contract.
“Already, there are agitations from a section of the Senior Staff Association of Electricity and Allied Companies (SSAEAC) at TCN, and the Nigerian Union of Electricity Employees (NUEE) who feel the minister was reversing the gains of TCN by removing Mohammed.
“He has handled welfare issues to the point that the unions label the two salary increments he has done in three years for the staff as UG1 and UG2,” NPCF urges Buhari”, Okoh said.
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