Investors offer N712bn for 3 independent power plants

The preferred investors and bidders of three independent power plants (IPPs) are currently negotiating a N712 billion ($1.975 billion) payment arrangement for 80 per cent shares in the power installations, New Telegraph has learnt. 

The Federal Government, which said this last weekend, added through the Managing Director of the Niger Delta Power Holding Company (NDPHC), Mr. Chiedu Ugbo, that the deals would be concluded in 2018.

The IPPs, Ugbo said, are Calabar Generation Company with 560 megawatts (MW) capacity; Geregu GenCo that has 434MW and the 513MW Omotosho Generation Company.

The earlier agreement for the bidders to pay 25 per cent of the bid price and later pay the 75 per cent balance is, according to the NDPHC boss, what is being negotiated. “Bidders seek to pay lower than that due to liquidity issues but at the same price,” he said.

In the lead of consideration by the NDPHC and the Bureau of Public Enterprise (BPE), the technical and financial committees of the privatisation would be consulted before advising Vice President, Yemi Osinbajo, on a decision to hand over the plants to the investors, he added. Meanwhile, Nigeria’s electricity sector lost over N540 billion to series of constraints that beset its operations in 2017, which made it difficult for the operators to supply the needed power to consumers.

Statistics from Nigeria Electricity Supply Industry (NESI) sighted by this newspaper showed that the sector lost over N1.5 billion daily to gas, water and transmission line constraints. The sector, the statistics added, generated 99,000 megawatt/hour (MWh/day) a day, but lost about 59,424MWh per day to the constraints, which have lingered for several years.

This hinders the industry from meeting the statutory obligations of providing cheap, clean and efficient sources of energy to the electrical loads and public at large.

The NIPP is an integral part of Federal Government’s efforts to combat power shortages in the country.

It was conceived in 2004 as a fast-track public sector funded initiative to add significant new generation capacity to Nigeria’s electricity supply system along with the electricity transmission and distribution and natural gas supply infrastructure required to deliver the additional capacity to consumers throughout the country.

In 2005, the Federal Government incorporated Niger Delta Power Holding Company Limited (NDPHC) to serve as the legal vehicle to contract for, hold, manage and operate the assets developed and built under the NIPP using private sector best practices.

The NIPP is being implemented jointly by the federal, state and local governments through the corporate vehicle of the NDPHC, a government agency owned by the three tiers of government but which operates strictly on the private sector business model. The NDPHC Equity Structure are as follows: Federal Government 47 per cent; 36 states, 35 percent; 774 local governments, 18 per cent.

The scope of the NIPP covers the entire value chain in the power sector, namely generation, transmission and distribution, including building from the scratch a national gas infrastructure to power 10 gas-fired power plants across the country.

The second phase of the NIPP aims to change the country’s power infrastructure in other locations not fully captured under the first phase of the NIPP, especially in the northern region. Selling off government’s 80 per cent equity in the NIPP generation assets only has ploughed back $7.1 billion – out of the country’s $8.46 billion investment in NIPP Phase I – into the joint coffers of the federal, state and local governments.

Rather than squander the $7.1 billion on other government projects in other sectors, the three tiers of government agreed under the power sector reforms programme to reinvest this huge sum in expanding the country’s power infrastructure under NIPP Phase II.

Candidate projects under NIPP Phase II are as follows: 43 critical transmission projects to resolve transmission bottlenecks; 51 transmission projects to improve wheeling capacity to 12,000MW; 31 other transmission projects as foundation for increase of capacity to 16,000MW plus communication and national control centre, among others; large hydropower – Mambilla, Gurara, Itisi – with total capacity to generate 3,450MW; small hydropower at 10 sites in the North to generate 83.25MW. Already, the NDPHC has received proposals from the state grid of China, AKAY and other interested foreign investors for partnership and financing of the NIPP Phase II projects.

The achievements recorded under the NIPP by the NDPHC were attained despite the infamous “Nigerian Factor”, which raised its ugly head all the way and continues to assail the process 10 years on.

However, the NIPP gains are also testaments to the often maligned “can do” spirit of Nigerians, including those driving the NIPP process, especially at the Presidency, the Senate, state and local governments, the Ministry of Power, the NDPHC and the Bureau for Public Enterprises (BPE).