*Drives down cost from N41bn to N38bn. GE shut out, Nigerian RE firms missing
Nigeria’s public procurement agency – the Bureau of Public Procurement (BPP) has cut down the original cost proposed for the construction of clean energy projects in 9 select federal universities and teaching hospitals from N41, 225,072,310.67 to N38, 965,147,881.92, thus saving N2, 259,924,428.75 on the procurement process.
OGN, learnt of this from a text of a presentation the Managing Director of the Rural Electrification Agency (REA), Mrs. Damilola Ogunbiyi, recently made to members of the Nigerian parliament who are investigating the procurement processes for the nine clean energy projects to be built in the universities by REA within the first phase of its Energizing Education Project (EEP).
Obtained in Abuja, the presentation also showed that while no renewable energy firm of Nigerian extraction was prequalified by the REA to bid for the projects, a globally recognized power firm, General Electric (GE) reportedly could not make it through the processes as it came a distant third behind two others, Sterling and Wilson, and Metka West Africa.
Also, it disclosed that the likes of Siemens Nigeria Power and Gas, and Finnish corporation – Wartsila Energy Solutions, which were amongst the five originally shortlisted bidders for the first phase of the EPP could not go further as they dropped out along the way on instances of conflict of interest, and inability to meet the prequalification requirements respectively.
Initiated by the federal government for the REA to execute, the EEP sought to help 37 federal universities and teaching hospitals get off the national grid and generate their power independently either through gas or solar sources.
It is expected to be implemented in phases and forms part of the energy access and sufficiency action point of Nigeria’s Economic Recovery and Growth Plan (EGRP).
Similarly, because Nigeria has identified poor power supply in the federal universities and teaching hospitals as a major challenge to effective learning, institutional operations and student residency, it then thought up the EPP to help provide stable power to the universities, and cut down their expenditure on diesel run generators.
The country would also leverage the EPP to make bold statements about its adherence to the commitments it made under the Paris Agreement.
Again, energy audits conducted by the REA also disclosed that about 224,800 people living within the 9 universities in the first phase would benefit from the 28.56 megawatts (MW) of electricity to be generated by the schools. The universities would also rest about 1,068 generators they currently use as alternative power sources once the projects come on stream.
How procurement processes cut down cost
According to Ogunbiyi’s presentation to the parliament, the REA invited five preferred bidders for the project – GE, Sterling and Wilson, Metka West Africa, Siemens Nigeria Power and Gas, and Wartsila Energy Solutions, to submit their prequalification and technical documents for the projects in Abubakar Tafawa Balewa University – Gubi Campus, Bayero University – New Campus, Usumanu Danfodiyo University – Main Campus, Federal University of Agriculture Makurdi, Federal University Ndufu-Alike Ikwo, Nnamdi Azikwe University – Awka Campus, Federal University of Petroleum Delta, Obafemi Awolowo University/Obafemi Awolowo University Teaching Hospital, and University of Lagos.
The documents, it noted were subsequently submitted by 3 of the 5 invited bidders on August 28, 2017, but with Wartsila and Siemens pulling out. This followed the technical evaluation and prequalification, as well as submission of the evaluation report to the BPP in September.
The REA then requested and got the BPP’s approval to move on to the financial bids stage on September 28, 2017, and then received and opened the financial bids for the projects on October 18, 2017.
From its evaluation of the financial bids, the REA stated that the duo of Sterling and Wilson, and Metka West Africa came out tops in their respective bids, while GE came third in two of the projects it put in bids for.
Subsequently, the REA sent to the BPP a comprehensive evaluation report of the financial bid for review, along with an application for Sterling and Wilson, and Metka West Africa to be granted ‘Due Process Certificate of No Objection’ for the award of the contracts. However, the BPP in response to the REA through the power minister, Mr. Babatunde Fashola, in November 2017, informed that it had cut down the project cost to N38.965 billion from N41.225 billion, shaving off N2.259 billion.
It said it could only award the requested certificate on this basis, and that it arrived at its position on the back of ‘criterion of reasonableness of price’.
According to the REA, the new expenditure plan was then communicated to the Sterling and Wilson, and Metka West Africa, and they accepted the revised tender sum, after which Fashola, presented a memo in this regards to the Federal Executive Council (FEC) for approval to award the contracts, and which was approved by FEC in December 2017.
EIA approved, sustainability plans developed
Also, the REA disclosed to the parliament that while land surveys have been developed for the first phase of the EEP, and certified by the Surveyor General in January 2018, it has developed the Environmental Impact Assessment (EIA) reports for the projects in line with standard practices.
In addition, it explained that a one-year Operations and Maintenance (O&M) agreement for the first phase has been incorporated into the bids submitted and approved by the BPP.
It noted that the one-year O&M agreement forms part of the 10 year O&M plan that has been developed for the projects, adding that It is expected that the EPC Contractor will also undertake the O&M for the remaining 9 years of the O&M plan, to ensure seamless operation and maintenance of the projects.