Re: Interstate Electrics’ Advert on Geometric Power and Aba Power’s Ring-fence Agreement with FGN

21/07/2015
Posted by: admin
Category: News

ABA POWER LIMITED

FACTS NOT FICTION Re: Interstate Electrics’ Advert on Geometric Power and Aba Power’s Ring-fence Agreement with FGN

Our attention has been drawn to several advertorials sponsored by EEDC in a bid to deceive the public on many issues about Aba Integrated Power Project and the validity of the Agreement between Aba Power ltd. and FGN. These publications are in furtherance of their efforts to brazenly use impunity to take over our company’s investments and distribution assets in Aba, including concerted attempts to intimidate our investors, financiers and staff, thus ensure that Aba IPP does not come to fruition.

On May 11, 2004 Geometric Power (GP) entered into a Memorandum of Understanding (MoU) between GP and the Federal Government of Nigeria (FGN), to build an integrated power project in Aba with a concession of a ring-fenced area of the Aba metropolis as the financial security for the project. In April 2005, GP and its sister company, Aba Power Ltd further enshrined the contents of the MoU in a binding Agreement with the FGN and NEPA for the project to serve Aba metropolis. With the subsequent unbundling of NEPA in 2005, a Supplemental Agreement was made in 2006 between the parties and the relevant unbundled successor companies of NEPA, including Transmission Company of Nigeria (TCN) and Enugu Electricity Distribution Company (EEDC). In preparation for privatization of the PHCN assets and in recognition of the Aba Power’s Agreement with the FGN, the BPE management in 2006 registered Aba Electricity Distribution Company Plc (Aba DisCo) at the Corporate Affairs Commission (CAC) as a 12th DisCo, in order to ensure compliance and full implementation of Aba Power’s rights over the Aba ring-fence. Shareholders of Aba DisCo are the BPE and Ministry of Finance Incorporated (MoFI) represented by Mrs Irene Chigbue and her colleague in MoFI. Thus our investors relied on these to raise the funds used in bringing the distribution network to international standard. These include constructing a 141MW Power Plant, over 105 kilometres of 33kV overhead lines, over 40 kilometres of 11kV lines, 4 new substations, and a 27km gas pipeline. We had also completed more than 95% of rehabilitation works and construction of 3 new control buildings at the 3 PHCN leased substations before Interstate Electric took over EEDC in November 2013 and promptly suspended our Contractors’ access to sites; granting of permits for construction/rehabilitation works at the 3 leased substations; and approval of outages for work on the overhead lines.

In their publications, EEDC sought to deceive our investors and the public about several issues regarding the Aba Integrated Power Project (Aba IPP) developed by Geometric Power, including the validity of the Lease Agreement with FGN, our rights over the Aba electricity ring fence, and the “transparency” of the bid process for the privatization of Enugu DisCo. The issue of the fraudulent selection process for the preferred bidder for Enugu DisCo is up to the new Administration to review. The right of ownership will be resolved by the Government or by the Court. We are not interested in a media war and will concentrate this publication solely on the issue of the lease validity. Below are excerpts from some relevant Agencies of Government:

See BPE’s advertorial validating the concession,
See the Regulator, NERC’s letter to Enugu DisCo affirming the rights of Aba Power over the ring-fence for the concession period.
The Federal High Court’s affirmation of the validity of the Lease and APL’s rights over the ring-fence.
BPE’s Info Memo for bidders on Enugu DisCo’s material contracts during the privatization, which shows that Interstate was fully aware of the encumbrance and the Aba IPP project before submitting their bid.

Excerpt from BPE’s Info Memo for bidders on Enugu DisCo

Section 2.1.2: Legal Overview – Material Contracts

The Company has the following major contracts:

a national prepaid metering contract…..and
a contract between the FGN, NEPA and Aba Power Limited for the distribution of power to the ring-fenced residential and commercial consumers at Aba, Abia State (see Enugu Disco – Legal/Regulatory – Aba Power Distribution Contract).

Quote: BPE’s Advert of June 10, 2014

“We want to state the following for the records and information of the public:

APL has a subsisting contract to generate, transmit and distribute power in the Aba and Ariaria Districts of Enugu Disco for 20 years. This contract was inherited from NEPA and PHCN based on the powers conferred on NCP by ERPSRA to create successor companies to NEPA/PHCN. The Federal Government of Nigeria, in consonance with the declared principle to abide by the rule of law, has not varied or vitiated the contract.”

Quote: NERC’s letter to CEO Enugu Disco on October 30, 2013

In view of the above mandate and the pending transfer of ownership of the EEDC to Interstate Electrics, it is important to reiterate, for the benefit of doubt, the existence of a legally valid and binding lease agreement dated April 28, 2005 between the Federal Government of Nigeria, Geometric Power Aba Ltd (GPAL), Aba Power Ltd (APL) and PHCN. While this encumbrance on the property purchased by EEDC is unrelated to the issue ownership of EEDC, Interstate Electrics as the new owner is legally bound to respect the lease agreement which it is inheriting along with the purchase of EEDC.

It is based on this lease agreement, the supplementary agreement executed between the FGN, EEDC, TCN and GPAL/APL for a twenty (20) year period and in fulfilment of all other requirements for the grant of license that GPAL and APL were granted an Embedded Generation license as well as a distribution License by the Commission to generate and distribute power within the ring-fenced area of Aba as described in the agreement between the parties while the excess is to be sold to the national grid.

Excerpt: Federal High Court Judgement of May 8, 2015 Re: Suit No . FHC/ABJ/CS/106/2013

There is no doubt that the concession agreement remains sacrosanct and valid. The Federal High Court has also validated the lease in its judgment, which was based on its finding that the lease agreement was properly entered into by the FG. It is important to note that the concession agreement has two rights conferred on Aba Power Ltd. The first is the right to lease the Aba Electricity ring fence network for a period of 20 years from the time of injection of electricity into the ring-fence. The second right is that should there be privatization of the distribution companies in Nigeria, that Aba Power Limited should be offered right of first refusal to purchase the ring-fence facilities.

Furthermore, the Court has affirmed the right of concession as follows: the Plaintiffs’ (i.e. Aba Power) reliefs in the said suit were, inter alia, Relief IV -a declaration that BPE cannot legally sell off the ring fenced area “without honouring and respecting the existing agreements between the Federal Government and the Plaintiffs. Interstate had sought to nullify the lease agreements; and Relief VIII -“An Order of perpetual injunction restraining the Defendants…in any way or manner interfering with the rights of the Plaintiffs to enter into any of the facilities within the Aba Business District.

The Court agreed with Aba Power and held that: “the 2^nd Defendant (Interstate Electrics Ltd.), in my view, cannot take benefit of the powers exercised by the 1^st Defendant (BPE) as the statutory agent of the Federal Government of Nigeria…on the one hand, and on the other, seek to declare the (lease) Agreements which the FGN through the 1^st Defendant (BPE), the Vice President, and the NERC recognised as valid, as illegal or as non-existence all in a bid to seek to have Enugu Distribution Zone handed over to it without any encumbrance…” and that “the Defendants, the 2^nd Defendant in particular (Interstate Electrics Ltd.) can be, and is hereby restrained from taking steps in any way obstructing, preventing or frustrating the 1^st Plaintiff in the quiet enjoyment of its leasehold interests in respect of the ring fenced area of Aba and Ariaria Business Units…”. In fact, the court read Interstate’s (2^nd Defendant’s) submission in the suit “with amusement” and described it as having a “hidden agenda by the tenor of its Counsel’s submissions”.

The misleading publications by Interstate clearly reinforces the Court Judgment’s apt descriptions of Interstate and its Counsel.

Letter from NERC to EEDC