SaharaReporters has unearthed details of how Abba Kyari, President Muhammadu Buhari’s Chief of Staff, is cutting huge financial deals in different sectors of the Nigerian economy. Our investigations reveal that Mr. Kyari has used his powerful position, with President Buhari’s apparent acquiescence, to strike a variety of lucrative but dubious deals, political and financial, for himself and his friends.
Our investigators discovered that four of the deals feature the trinity of Mr. Kyari, Louis Edozien, who is the Permanent Secretary at the Ministry of Power and a former United Bank of Africa staffer with Kyari while at UBA, and Wuraola Z. Abiola, a daughter of the late M.K.O. Abiola.
Mr. Edozien, whose name rings least loudly in the deals, used to be a technical director at the Niger Delta Power Holding Company (NDPHC), the statutory vehicle for the operation of National Independent Power Project (NIPP). Highly connected sources told SaharaReporters that Mr. Edozien was sacked from NDPHC for falsely claiming to have undergone the mandatory National Youth Service Corps program. He should have been disqualified from appointment as Permanent Secretary as Nigerian law stipulates that candidates for public sector jobs must have done the mandatory one-year national service.
However, with the apparent backing of Mr. Kyari, his longtime friend, Mr. Edozien was able to gain elevation to the post of Permanent Secretary.
A source at the Ministry of Power stated that the reason for Mr. Kyari’s desperation to sponsor Mr. Edozien’s bureaucratic post became clear when the permanent secretary uncorked a variety of dubious deals.
Documents obtained by our investigators showed that Mr. Kyari and Mr. Edozien are major shareholders in an energy-sector company named Gigagas. The company professes a mission to “rapidly bring gas into the Nigerian domestic market”. The company’s history predates the current administration, with its corporate influence extending to certain influential figures in the administration of former President Goodluck Jonathan.
Under the Jonathan administration, Shell Petroleum Development Corporation, under enormous pressure from then Petroleum Minister Diezani Alison-Madueke, awarded Gigagas the right to divert gas from offshore sources into the domestic market. Shell’s opposition to the arrangement, our sources disclosed, was because Gigagas had neither financial nor technical competence. The oil and gas giant, however, reluctantly agreed to provide gas to the newly incorporated Gigagas without a tender process.
Mr. Edozien consummated the deal by drawing on his friendship with Tony Muoneke, former head of the Nigeria National Petroleum Corporation’s (NNPC) upstream arm, who reached out to Mrs. Alison-Madueke and got her to pressure Shell.
Despite its success at getting the deal done and the abundant demand for gas in the country, Gigagas has failed to deliver gas to the market, missed all the deadlines stipulated in the agreement, and has been unable to raise the required funding because the financial community remained uncomfortable dealing with dubious companies, especially those that came into existence as financial arms of political interests.
“After the experience with Atlantic Energy, bankers are now wary of dealing with companies that receive contracts solely through their political connections. The fear is that such companies will collapse when their political backers lose power and are usually not professionally run,” explained a source.
However, owing to Mr. Kyari’s backing, Gigagas remains unaffected by its failure to perform. Relying on presidential muscle represented by Mr. Kyari, it coerced Shell into continuing with the dubious gas supply arrangement. A letter dated June 2, 2015 and copied to President Buhari, exemplified the naked show of muscle. In the letter, Mr. Edozien told Shell that it must comply with Gigagas’ demands and if it did not, the dubious company would seek alternative ways to “recover its investment.” The Permanent Secretary also warned, “Shell should not and cannot escape complicity in the failure of a national project.”
An industry insider told SaharaReporters that Shell has been put in a bind: Caught between its desire to burnish its image in Nigeria and having to continue an opaque agreement with an incompetent company established by greedy political influence hawkers. As Mr. Edozien, abetted by Mr. Kyari, continues to squeeze Shell for what he wants for Gigagas, he has also turned his attention to other lucrative transactions.
One such transaction was captured in an April 15, 2016 memo to the Minister of Power, Works and Housing, Babatunde Fashola. In the memo, the Permanent Secretary pushed the need for the government to develop two marginal oil fields, OPL 203 and OPL 204. His memo to the minister also called for an award of the production contract to a “new project company incorporated for the purpose.” The company, added Mr. Edozien, would be owned by the Ministry of Finance Incorporated and initially supervised by the Energy Resources Department of the Ministry of Power. The memo further explained that the new company “will initiate technical and commercial discussions with potential drilling, gas processing and pipeline partners and contractors for accelerated delivery of the gas.”
A well-placed insider confided in SaharaReporters that top guns in the ministry as well as the Presidency were confused by the recommendations until they realized that OPLs 203 and 204 belonged to the MKO Abiola family-owned Summit Oil.
The link between the Abiola family and Messrs. Kyari and Edozien is Ms. Wuraola Abiola, Managing Director of Management Transformation (MT) Limited. The three are stakeholders in Gigagas, as shown by attendance records obtained from meetings between Gigagas and Shell.
A source familiar with the personalities said when Shell continued to avoid Mr. Edozien, he dreamt up another scheme for a deal and started shopping around for avenues to make it work.
The trio, together with Ms. Ngozi Edozien, sister to the Permanent Secretary, sold the idea of appointing MT as transaction advisors to the proposed power sector bond issuance program to address the liquidity problems afflicting the power sector.
Ms. Abiola communicated the proposal in an October 5, 2015 letter to Vice President Yemi Osinbajo. The letter detailed discussions at a power sector stakeholders’ meeting, held on September 11, 2015, on the bond issuance program with the Vice President.
In the letter, MT requested the Vice President to advise the Nigeria Bulk Electricity Trading (NBET) Plc. to establish a sustainable bond program to address funding shortfall in the electricity value chain. The steps the company requested included its “appointment, following due processes, working with Invivo Partners Limited as NBET advisors on the establishment of the bond program on terms to be agreed with NBET and Management Transformation Limited." Invivo Partners is owned by Ms. Edozien, who is also a member of the Gigagas gang.
Ms. Abiola's company also requested that the Federal Government provide guarantees or undertakings envisaged for the issuance of the proposed bonds.
MT’s requests were based on the Vice President’s directive to the Debt Management Office (DMO) to coordinate a meeting of stakeholders and make recommendations on the bond issuance proposal Ms. Abiola's firm made in conjunction with Invivo Partners.
The DMO-coordinated meeting took place on September 16, 2015, Ms. Abiola's letter to the Vice President stated. According to the letter, the DMO led a discussion with NBET, Gigagas, Securities and Exchange Commission as well as MT towards a detailed understanding of the core problems resulting in the funding shortfall, the key government agency affected and MT’s recommended solution.
The meeting resolved that a properly structured and administered bond issuance would address the shortfall over the life of the financial instrument. It also resolved, the letter said, that NBET was the most appropriate agency of government to issue the securities, as the government agency most affected.
Following the meeting, MT claimed it took steps to sensitize the Nigeria Electricity Regulatory Commission (NERC), distribution companies (DISCOs), Independent Power Producers (IPPs) and gas producers to its proposal. This, MT said, attracted positive responses in terms of its viability.
MT provided a background to its request, detailing the well-acknowledged indices of funding gap in the sector. “All supplier payments in the electricity industry value chain from fuel supply, generation, transmission, distribution, metering and retailing down to the consumer, rely on payments from the consumers to the distribution/ retail licensees (currently the DISCOs) for electricity consumed,” noted MT. That income stream from which DISCOs drink, it further noted, were inadequate to cover payments across the value chain. The shortfall, observed MT, arises from sub-cost tariff and inefficient collection of fees. MT added that the funding gap should be bridged over time, as the DISCOs made a commitment to invest in metering network improvements and other facilities when they signed the purchase agreements for the power assets. It was also expected that the ongoing tariff adjustments within the Multi-Year Tariff Order (MTYO) framework would bridge the funding gap.
In addition, MT observed that, while previous solutions applied to the funding gap in the sector remained, they had constituted a burden to the Federal Government and were unsustainable, particularly with the increasingly lean resources available to the government. As such, MT argued, it was imperative to find an alternative financial market solution, the reason for which it was making its proposal.
MT's letter to the VP stated, “We have proposed a deferred payment note to address future value chain funding gaps. The deferred payment note would be structured as bond with features that will ensure acceptance by electricity value chain suppliers, investors and financial markets.
“We also recognize that transmission capacity is a major inhibitor to the long-term growth of the power sector. Significant funds are required by Transmission Company of Nigeria (TCN) for necessary investment to increase transmission capacity. We propose that a different, albeit related, market-driven solution be developed to address TCN’s robust investment as crucial starting points in the development process.”
SaharaReporters learned that the Vice President chose to be cautious and eventually referred the matter to Mr. Kyari’s office.
Predictably, the president's Chief of Staff resolved the matter in favor of MT and Invivo, which were quite appointed transaction advisors to the proposed bond issuance program.
Not satisfied, the Gigagas greed machine and its associates came up with another scheme, which sought to establish an “emergency power project” on the site of the old Afam Power Plant in Rivers State.
According to our sources, the scheme was the product of Mr. Edozien’s crookedly fertile mind. Not surprisingly, it received express presidential approval courtesy of Mr. Kyari’s connection to the national political power grid.
Over the last few months, the Permanent Secretary rushed through a deal with American technology giants, General Electric (GE). The new venture, Afam Three Fast Power Limited, sources confided, was incorporated and is initially co-owned by the Ministry of Finance Incorporated and Ministry of Power. It was conceived to later result in a contract with GE, without tender, for the purchase of a 240-megawatt trailer-mounted emergency on a site already beset with enormous gas supply and power evacuation problems. An insider in the power sector described the project as "simply a scam."
“The last thing the country needs is more stranded generation capacity. Equally of note is that there is already a power plant at Afam, which Siemens has offered to refurbish at a fraction of the cost of what GE demanded. But that solution will not give Mr. Edozien and his cohorts what they are looking for,” the insider told SaharaReporters.
The GE venture, however, has since run aground, following Mr. Edozien’s demand that the Nigerian Sovereign Investment Authority (NSIA) become an investor in it by immediate release of $34 million.
The sum was dressed up as “initial contract payment of $28 million due under the agreement with GE (being 15 per cent of the total contract price)” and “a further $6 million in financing to support the construction of a switch yard for the project, part handling charges and other miscellaneous costs."
Our sources said the $6 million being demanded for miscellaneous costs was requested to pay contractors associated with the Permanent Secretary.Mr. Edozien, who is known to play in a higher greed league, was targeting a bigger sum from Power Systems, the contractor lined up to provide Engineering, Procurement and Construction “wrap” for the GE contract.
SaharaReporters learned that the NSIA batted off Mr. Edozien’s request that it become an investor in the venture. Instead, it demanded further information from the permanent secretary. Our sources disclosed that NSIA’s request enraged Mr. Edozien, who then insisted that the NSIA should release to NBET the capitalization monies it holds on behalf of NBET so it could be spent on the new venture.
Insiders maintained that the various dubious deals being pursued by Mr. Kyari and Mr. Edozien were distracting the government’s attention from the crippling power problems the country currently besetting Nigeria. With the yawning funding gap in the electricity value chain and the increasingly anorexic value of the naira to the dollar, the World Bank has scheduled a meeting with the Power Minister and the Finance Minister, Mrs. Kemi Adeosun, for Thursday and Friday, December 8 and 9, 2016. However, the proposed meeting, our sources revealed, was facing stiff opposition from the duo of Kyari and Edozien, who have been telling the President that the liquidity crisis in the power sector was unduly exaggerated and that the NBET bond issuance program, a pie in which they have their fingers, is all that is required to provide temporary relief.