The Zungeru Dam/Hydropower Plant has seen its share of difficulties and has consequently been delayed; it is still under construction at the time of writing, but it is already delivering some electricity and seems to be turning the corner.

This is in contrast to the Delta State Power Plant, sponsored by the state to fill an urgent need for electricity, as it is the primary oil-producing region of Nigeria. This project sits abandoned, with billions having been spent on it, and accusations and charges of corruption stand in the way of any possible forward movement in the future.

10.1 The Zungeru Dam/Hydropower Plant: A (Soon-to-Be) Completed Project

10.1.1 Brief History

The Zungeru Hydropower Plant project was originally planned in 1982, but it took until 2012 for President Jonathan to announce its start. Zungeru is a 700 MW hydroelectric facility being built with Chinese assistance on the upper and middle reaches of the converging Kaduna rivers in Niger State. The Federal Ministry of Power is the owner and implementing authority of the project. With an original cost estimate of $1.3B, Zungeru is the largest hydropower project under construction. It was financed with a “concessional loan and preferential export buyer’s credit” of the Export-Import Bank of China (China Exim Bank); this loan came with the appointment of a Chinese contractor, a consortium of the China National Engineering Electric Co. Ltd (CNEEC) and Sinohydro. The China Exim Bank supplied around 75% of the funding, while the Nigerian government contributed the remaining 25% ($309M). Construction work on the power plant started in May 2013 and was expected to take 60 months (until 2018).

The highly technical project consists of a 2400m RCC roller concrete gravity dam and a clay core rock-fill dam, a powerhouse behind the dam, four 175 MW turbines and a tail race channel. The Niger State Government was fully behind the project, with the governor publicly stating: “We are conscious of the importance of this project, not only as it affects our people, but for the nation, too. That is why we put in place a committee to interface with the communities and the contractors. We don’t want anything to delay the delivery of this project. All hands must be on deck to ensure that we have a hitch-free operation on-site and for the project to be delivered on schedule.”

Shortly thereafter, it became publicly known that the project would displace 98 communities domiciled in three neighbouring councils of the state. Therefore, Professor Chinedu Nebo, Minister of Power, inaugurated the Zungeru Hydro Community Relations Committee (CRC) in February 2014, in order to oversee the relocation of approximately 22,000 people in the affected communities. The government also hired Global Legend Integrated Concept Company, a professional service provider based in Nigeria, for the relocation of communities.

An effort to support the relocated communities was required, with financial support for the Hydroelectric Power Producing Areas Development Commission (HYPPADEC) through the federal HYPPADEC Act of 2010 (Poindexter , 2014). However, ten months later, communities challenged the project in court, seeking a permanent injunction over low compensation and omission of names, while the project was stalled because of what the federal government described as “teething problems”. The state minister for power described the suing parties as “communities and powerful people” that forced the government to “bend over backwards” to satisfy them (Okafor , 2014).

Work stopped when Sinohydro laid off around 90% of its workforce (Echewofun , 2015). The HYPPADEC bill was amended in 2015 to reduce the contribution that hydropower projects needed to make to the commission. However, it took until the end of 2015 for Sinohydro to rehire 800 workers and restart work, a delay of two years (Construction Review Online , 2016).

After the restart, the project progressed as planned. There were some problems, such as torrential rains that put the entire construction site under water and forced the construction teams to dig the tailrace area out from the water and mud. However, these were within the normal expected range for such a large project and were overcome by the contractor in collaboration with the project supervising company, Tractebel, and its Nigerian partner firm. In March 2018 the federal government declared the project 45% complete (Bhaktar , 2018). The authors visited the site in the summer of 2019 and witnessed orderly progress (Fig. 10.1).

Fig. 10.1
figure 1

Zungeru construction site in the summer of 2021

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The project was not completed in 2018 as planned. The communities resettlement litigation will delay completion until 2022 (possibly early 2023) and cause a budget increase to the amount of $1.5B. However, one turbine started producing electricity at the end of 2019, and at the time of writing, in early 2021, progress looks so solid that completion now looks highly likely.

10.1.2 Enabling Factors of Completion

The authors discussed the Zungeru project with Edozien, Permanent Secretary of the Ministry of Power, Works and Housing, the project owner. He stated: “Yes, there are vacuums in government project management, which need to be filled by a process of project management activities, and there are at least six things to be done that can make a project successful.” He named six principles that he thought were being followed in the Zungeru project, enabling it to avoid funding shortfalls and overcome difficulties.

  1. 1.

    There is a clear statement of objectives by the owner, at the right specificity (neither too high-level and vague nor too detailed, specific and inflexible).

  2. 2.

    There is “good faith” with the contractor, which enables the flexibility of working through (inevitable) problems and surprises without any party insisting on a fixed view and/or suing. (This was endangered in 2016, when several subcontractors started a lawsuit for a number of small issues—Edozien did not even [want to] know what they were. However, the project organization worked through them.)

  3. 3.

    Funding stability—the loan from China has been ringfenced in a fund, so project continuation is not subject to annual budget battles (which are a major obstacle to project continuation in Nigeria).

  4. 4.

    There is a clear governance structure, with respected lines of authority. The government (minister) only controls for continued pursuit of the agreed goals. Then, there is a project supervisor in the ministry, who supervises the project consultant (Tractebel), which has a supervising team on-site that supervises and controls the (Chinese) contractor.

  5. 5.

    The contractor is competent and has the capacity to deliver the project.

  6. 6.

    Everyone must understand their role and stick to it. (For instance, the consultant, who was paid by a time and materials contract, initially felt they were responsible for their time and effort only, and not for the outcomes of their supervision. They subsequently stepped up. Or, the governor tried to interfere and was prevented only because [then] President [Buhari] refused to intervene, so it was referred back to the governance structure.)

These six requirements are consistent with the principles that our study has found. They are too rarely followed (including by the Ministry of Power, Works and Housing, as we have seen). The experience of the Zungeru project suggests that Edozien should have added a seventh principle: do not forget, neglect or underestimate stakeholders, even if they are simple village communities that are displaced by the project. These communities managed to mobilize powerful supporters and caused significant overruns and delays, which would have been avoided had they been taken seriously from the beginning.

10.2 The Delta State Oghareki Power Plant: An Abandoned Project

10.2.1 Initiation

Delta State hosts the majority of the oil production in Nigeria, representing a considerable amount of industrial activity. However, the federal electricity supply was 100 MW, compared to the approximate 1000 MW needed. The idea of building an independent power plant (IPP) for Delta State was first proposed in 2000, during the administration of Governor James Ibori. Ibori ultimately did not take on the project before leaving office in May 2007, but Emmanuel Uduaghan, his successor, did.

In an executive council meeting in May 2009, Governor Uduaghan approved the contract award for the acquisition and installation of two Open Cycle Rolls Royce Trent Gas Turbine generators capable of being fired by natural gas and diesel oil to generate 100 MW of electricity. The contract was awarded to Davnotch Nigeria Limited, in partnership with an American firm, Southern Integrated Energy Limited, at a cost of $125M, corresponding to N21.75B at the 2009 exchange rate of N176 to a dollar (Marskson , 2020).

10.2.2 The Alleged Corruption

In 2010 Ovuozorie Macaulay, Commissioner for Energy at the time, in his brief to the state’s Economic Management Team, alleged that the government had paid 60% of the contract sum to Davnotch the same year (actually, within a couple of days). The commissioner also alleged that at the time the contract was awarded, one of the owners of the company (and its founder) was Victor Ochei, a member of the Delta State House of Assembly.

The investigation further alleged that the contract sum of N21.7B did not include land acquisition, appointment of consultants, insurance, environmental impact assessment (EIA), construction of a 132/33KVA transmission line to bring the generated power to the grid or construction for the gas supply for the IPP project. This led to the upward adjustment of the contract sum in 2010 to N23.2B (Marskson , 2020).

These revelations immediately sparked accusations of corruption. For instance, the Delta State Elders, Leaders and Stakeholders Forum addressed the Chairman of the Economic and Financial Crimes Commission (EFCC) with the accusation that there was no formal contract between the state and Davnotch, no invoices and no letter of credit (an accusation that Davnotch denied). However, the Federal Crime Agency later examined the case and confirmed that Davnotch did not have an operating licence, meaning that the contract payment should never have been authorized by the assembly (as confirmed to the authors in an interview). Victor Ochei became speaker of the Niger State Assembly in 2011. He claimed on his website that he had divested himself of all connections to Davnotch when he became speaker, and he denied all involvement when the corruption affair heated up. In 2014 Ochei resigned as speaker of the assembly (Kupferman , 2016).

In July 2011 Governor Uduaghan expressed the belief that the plant would be completed before the end of his tenure in 2015, as the two Rolls Royce generators were being delivered before the end of 2011. However, it soon transpired that almost no work was being done on the construction site, and the turbines were delivered to an empty site and were therefore out in storage (Fig. 10.2). The usual excuses were given, for example, the lack of gas supply, the rainy season and a fire in early 2015 (this was reported in the press as “putting some old equipment on the site and incinerating it to have an excuse” [Shibayan , 2018]). Davnotch issued a press statement stating that “if building a power plant is that easy our country would have solved her power problems a long time ago” (Global Energy Monitor Wiki, 2020).

Fig. 10.2
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Delta State Oghareki Power Plant Site behind gate

Full size image

However, by the end of 2015, weeds had overtaken the project site, which had been deserted for a year. The temporary offices were under lock and key, while the warehouses were far from complete. The press reported that Davnotch had abandoned the project (Oghre, 2015). In May 2017 observers noted that apart from the access road to the project site at Oghara, a perimeter fence, three buildings and a gantry, there was nothing else on the ground. Governor Okowa, who inherited the project when he took office in 2015, said during a town hall meeting at Oghara (which included the former governor, James Ibori) that the government needed money to connect the turbines at the plant to a gas pipeline. “A lot still needs to be done. We have brought in technical partners. Delta cannot complete the project alone because of dwindling resources. We need about N20 billion to bring it to a functional level. The options are either to sell outright. But the important thing is to make it functional” (Oliomogbe , 2017). In other words, the government needed almost the entire original contract sum again in order to get the plant built. Okowa installed an investigation task force to find the culprits, but this did not result in indictments.

The government announced, under the outgoing governor, Uduaghan, that it “had finalized plans to sell off the IPP project to investors” (Orusi, 2016). However, to date there are no indications that any willing investor has been found.

The Nigerian Economic and Financial Crime Commission (EFCC) launched an investigation, and the preliminary report alleged that more than 50% of the total contract sum had been paid to the contractor before the contract was awarded correctly. Furthermore, the accounts of how much money had actually been paid to Davnotch were contradictory (Oghre, 2015).

Moreover, in early 2016 the Serious Fraud Office (SFO) of the UK opened an inquiry into Rolls Royce, alleging bribery in multiple countries. One of these countries was Nigeria, the bribery having been committed by the company PSL Engineering & Control, which was acting for Rolls Royce, allegedly to influence government officials; Victor Ochei was allegedly named in the inquiry as having been involved in this act of bribery (Urhobo Today, 2016).

Facing a combination of the money having run out (as the state did not have the funds to pay for the project twice) and of unresolved controversy over bribery and embezzlement, the project has been abandoned and is unlikely ever to be rescued (at least in its current form).

10.2.3 Implications

No court rulings or punishments have been issued in the Oghareki plant failure. The public angrily demanded that action be taken—for example, the Empowerment for Unemployed Youth Initiative pointed out that corruption contributed to poverty and unemployment, and they blamed the former governor, Ibori, and former speaker, Ochei: In their words, “From […] evidence submitted, it remains clear that [Ochei] using his privileged position, in flagrant abuse of public service rules and in contravention of the Money Laundering Prohibition Act, influenced and obtained the full payments for the said contract amount and diverted same to acquisition of choice properties, political flamboyance and ferreting funds from Nigeria overseas” (Shibayan , 2018).

The Federal Crime Agency confirmed to the authors that there had been fundamental problems with due process. A second inquiry was launched by the office of the state attorney general—but this was also questioned by the Empowerment for Unemployed Youth Initiative who alleged that the state attorney general was appointed by the Executive and approved by the State Assembly, thus suffering from a possible conflict of interest. In any case, no judgements have been handed out, and therefore there are no culprits. Certainly, Ochei has not been backward in “showing off his wealth”; for instance, he was described in the rainbow press as selling one of his three Toronto luxury penthouse apartments (Kupferman , 2016). He has also vigorously pursued his political career, for instance, by filing and winning a lawsuit against his political party, the APC, forcing annulment of the party’s primary election for the governor race because the election had sidelined him (Okafor et al., 2019); and in 2020 Ochei was appointed by President Buhari as the executive director of Maritime Labour and Cabotage Services in the Nigerian Maritime Administration and Safety Agency (NIMASA) (Vanguard, 2020).

There is an interesting contrast to this outcome in the UK: the Serious Fraud Office did hand out judgements. It identified 12 counts of conspiracy to corrupt or failure to prevent bribery in seven countries: Indonesia, Thailand, India, Russia, Nigeria, China and Malaysia. Rolls Royce was ordered to pay fines of £497M, plus costs to the SFO in the UK, in addition to £141M to regulators in the USA and £21.5M in Brazil. Furthermore, 38 employees faced disciplinary hearings. Some people complained that this was not enough, but action was taken and the company was severely punished, with a sum three times its annual profits plus a depression of its share price (BBC News, 2017).

However, no action was taken in Nigeria. Thus, this study cannot name anyone as having engaged in corruption. However, it is abundantly clear that corruption and bribery have been committed, and the lesson for perpetrators is that they can get away with it.

In concluding, we can summarize that the Delta State Oghareki Power Plant project is perhaps the most extreme example of corruption among our case studies. Corruption singlehandedly sunk this project into failure. In the other cases, corruption was more subtle—while present, it led to cost increases and bad decisions, weakening projects so they possibly succumbed to other problems that they might otherwise have overcome. Corruption is always corrosive, but this case is a disturbing illustration of how $125M can disappear into the pockets of powerful officials and their foreign accounts, destroying an important project and massively contributing to poverty and deprivation in their state .