The federal government and states have finally reached an agreement on the sale of five National Integrated Power Projects (NIPPs).
Alex Okoh, director-general of Bureau of Public Enterprises (BPE), who disclosed this to journalists Tuesday in Abuja, said the agency’s expectation for the sale is to exceed the N260 billion projection in the 2023 budget.
The federal government, through the BPE, had since last year planned to divest 100 percent of its shareholding in five of the power plants being run by the Niger Delta Power Holding Company (NDPHC) in order to finance the budget deficit.
The plants are Geregu Generation Company Ltd, Kogi; Ihovbor Generation Company Ltd, Benin; Calabar Generation Company Ltd, Cross River; Omotosho Generation Company Ltd, Ondo; and Olorunsogo Generation Company Ltd, Ogun.
BusinessDay had gathered that the combined capacity of these power plants is about 2,300 megawatts.
“The expectation in the fiscal plan for the federal government’s 2023 budget as regards asset sales is N260 billion. And the key assets that we are looking at are the power assets – the five of the NIPP plants. Incidentally, we are reaching some understanding with the state governors for the sale of those five power plants,” Okoh said.
He added: “And that’s what has really dragged this transaction for at least for the past three years, just getting a common stakeholder understanding on the critical need to realise value from those assets now, before they depreciate beyond value.
“Thankfully, last week, we were able to resolve the issues with the governors; so for those assets, we are likely to reach financial opening of the bid before the end of the year, which is maybe next week. But the proceeds itself will come in in the first quarter of next year. So we actually project that in the first quarter of next year, we’ll be able to exceed the expectation of the budget for 260 billion, by March we should have done that.”
According to Okoh, out of the projected proceeds, the federal government owns 47 percent, which would be used to fund the 2023 federal budget, while the remaining 53 percent goes to the states since the assets are jointly owned.
Read also: Why we oppose planned sale of NIPPs – Fayemi
Commenting on some of the electricity distribution companies (Discos) that have been taken over due to loan default, he hinted that the United Bank for Africa (UBA), which took over the Abuja Disco, is already in talks with a core investor for asset acquisition and transfer.
He said: “I know that in some quarters, it may have been misrepresented that the government took over the Discos; nothing of such happened. In the case of Ibadan Disco, it was AMCON which bought the debts of the initial lending institutions; for Benin, it was Fidelity Bank; Kaduna, Afrexim and Fidelity Bank; Kano, Fidelity Bank; and Abuja Disco, UBA.
“So the banks were allowed to step in to exercise their rights over the shares at least to mitigate their exposure on the acquisition facilities to the Discos. Now, the government, being still a 40 percent shareholder in all of these Discos, realised that banks are not utility operators; they are not Disco operators, and then gave the directive that they must exit the ownership of those shares in a maximum period of 12 months.”
He said the initial period given was six months, with another extension of six months, within which they have to sell those shares to qualified Disco operators that can then manage them efficiently.
“In that process, you recall that the intervention in Abuja which happened around December last year preceded the other four Discos. So the 12-month period is about expiring, and we are aware that UBA and a core investor are about to close out on the sale so that they can meet the deadline,” the BPE boss said.
He said the BPE’s role is to ensure that a fit and proper investor acquires those shares.
“Our consideration should align but may be different from that of the banks. The banks will be looking for the highest off-take, so that at least they can cover as much of their loan as possible. But for us at BPE, we are looking for technical capacity to operate the utility efficiently,” he added.
