• Sunday, May 26, 2024
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The ‘politics’ of the power sector (1)

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 I have noticed that those that love to use this issue as a convenient ‘political excuse’ to always lampoon the current administration are actually largely ignorant of what is going on in the sector – and I have decided to discuss these developments as follows:

State of current power delivery

There is the group of those who would never believe that any progress is being made in the power sector irrespective of what you tell them; irrespective of them enjoying improved power supply in their homes. They are the folks that would suggest that the power minister, Chinedu Nebo, lied when he mentioned that we would be losing about 1,112mws of power to some maintenance at a Chevron plant for a few days; they claimed rather that “the reason for the drop was because rainfall had subsided resulting in a fall of what we were getting from the hydro plants”. These folks, of course, do not know that hydro sources only account for less than 30 percent of what the nation currently uses to provide power to its population.

Well, now that power has returned to what it was before the maintenance exercise and even possibly improved beyond what it was before the repairs, they have gone quiet about this their “rain theory” and they, of course, will be too proud to tell those they misled that they were wrong; neither will they admit that power has improved in their own homes since then even as the current installed available generation capacity within the sector has risen to 6,000mw while generation capability is currently at 5,228mw with peak generation above 4,500mw.

State of the privatisation process and PHCN labour issues

Then there is also the group that don’t know that the power companies have already practically been fully privatised and that government control in the sector would soon be reduced to that of transmission and regulation of the sector thereby ushering us into the sort of improved services that we currently enjoy within the telecommunications industry. They would also tell you that these companies have been ‘dashed’ to some cabals even though these companies fought through very competitive processes to win the bid for these successor companies in the full embrace of the international business community.

At the beginning of the privatisation of the distribution companies (Discos) and generation companies (Gencos) in 2011, the Bureau of Public Enterprises (BPE) received 301 Expression of Interests (EOIs) and later shortlisted 207 firms that met the minimum qualification standards set. Interestingly, only 163 firms purchased bid documents.

This process produced 10 preferred bidders for the Discos and 5 preferred bidders for the Gencos. These companies are buying 51 percent shares in these successor companies while the FGN would still hold on to the other 49 percent – they have already made 25 percent down payments on the transaction to the FGN on these transactions and have executed initial contracts to this effect. Here is the definitive list of the of these transactions:

Discos: (1) Kann Consortium for Abuja Successor Company at $164 million; (2) Vigeo Power Consortium for Benin at $129 million; (3) West Power & Gas for Eko at $135 million; (4) Interstate Electrics Ltd for Enugu at $126 million; (5) Integrated Energy for Ibadan at $169 million; (6) NEDC/KEPCO for Ikeja at $131 million; (7) Aura Energy Ltd for Jos at $82 million; (8) Sahelian Power SPV Ltd for Kano at $137 million; (9) 4Power Consortium for Port Harcourt at $124 million; (10) Integrated Energy Distribution & Marketing for Yola at $59 million.

For the Gencos, the preferred bidders are: (11) Amperion for Geregu Plant at $132 million; (12) Mainstream for Kainji Plant at $50.76 million plus commencement fee of $237,870,000; (13) North-South for Shiroro Plant at $23.60 million plus commencement fee of $111 million; (14) Transcorp/Woodrock for Ugheli Plant at $300 million; (15) CMEC/Eurafric for Sapele Pant at $201 million.

And the success of this process has made even more firms to jostle for Afam Power plc and Kaduna Electricity Distribution plc. Both processes were earlier truncated because none of the bidders had scored the required minimum 75 percent to progress to the financial bid stage which was later re-opened, now having 20 companies being pre-qualified for this process; while the Enugu Disco is being resolved under some other arrangements, bringing the total of these companies to 18.

Well, these our sensational analysts would tell you, “Until we see the power in our houses, we won’t believe.” No problems. Thomas said the same thing about Jesus Christ until Christ showed himself in person. So these guys would undoubtedly see the power in their homes very soon as well. But then, how can they be suggesting that 18 privately-managed companies with international partners and exposure who would have invested billions of dollars in acquiring and re-investing in these power assets would all fail in one single swoop? Why should anyone submit himself to such levels of unimaginable self-inflicted ignorance?

 

FAVOUR B. AFOLABI

Afolabi is president at Viva Real Estates Company

 

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