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WHAT NIGERIANS SHOULD KNOW ABOUT THE PRIVATISATION SCHEME OF THE NIGERIAN POWER SECTOR

06 Nov

By Engr. O’tobi Oyetimein mNRCS (tweet:@TitoTobyPhoenix)

Facts About The Nigerian Power Privatization Scheme

The privatisation process for the power sector is concluded and a lot of Nigerians have expressed hope for brighter days ahead. Nigeria began handing over the power distribution and generation companies created from the unbundling of the Power Holding Co. of Nigeria, or PHCN, to new investors in a process that ranks as one of the world’s largest privatisation processes but ironically, there still remains a large number of the country’s 160 million people who don’t have the facts concerning the privatisation process and so don’t know what to expect from the new investors. If you fall in that category, you can read this:

·         According to the DG of Bureau of Public Enterprises (BPE), Benjamin Dikki, the over $3 billion proceed expected from the privatization of the 18 Power Holding Company of Nigeria (PHCN) successor companies makes it the biggest ever privatization transaction in global history.

·         First let me clarify the number of PHCN Successor Companies. There are 11 Distribution Companies (Discos) and 7 Generation Companies (Gencos) and then there is the Transmission Company of Nigeria (TCN).

·         The privatisation process limits the government’s role in the power sector to policy formulation, planning and technical regulation on the use of appropriate fiscal and tariff incentives.

·         Transmission company (TCN) is 100 per cent owned (TCN) by the government.

·         Generating companies (GENCOs) 20 per cent owned by government and 80 per cent private sector ownership.

·         DISCOs are 60 per cent owned by private sector, 40 per cent owned by government.

·         The new investors will be responsible for operating the power companies and making the necessary investments to improve distribution networks and generation in line with the federal government’s objective of improving the country’s power supply.

·         Nigeria only provides about 4,000 MW of electricity to its population of over 160 million. South Africa provides over 40,000 MW to its 51 million citizens.

·         Distribution companies, called DISCOs include the:

o   Abuja Distribution Company, won by KANN Utility Consortium;

o   Ibadan Distribution Company, whose preferred bidder is Integrated Energy Distribution and Marketing Ltd.;

o   Eko Distribution Company, won by West Power & Gas;

o   Kainji Electricity Distribution Company, whose preferred bidder is Mainstream Energy Solutions Ltd.; and the

o   Jos Distribution Company to Aura Energy Ltd.

o   Ughelli Power Generating Company, a thermal station that has installed capacity of 972 megawatts, went to a consortium including local firm Transnational Corp. of Nigeria while

o   Geregu, a thermal station with 414 MW capacity, went to Amperion Power Distribution.

o   The Enugu Disco

o   The Kaduna Disco the process is still on because a Preferred Bidder and Reserve Bidder emerged later and so the transaction is still proceeding.

·         For the Generation Companies, GENCOS there are Sapele, Kainji, Geregu, Ughelli, Egbin, Shiroro and Afam.

·         Nigeria realised N400bn from electricity privatisation

·         It is Nigeria’s largest privatisation transaction. It is also Africa’s largest privatisation transaction.

·         Despite the handover, drastic improvement in the country’s power sector is estimated to be noticed after about 1 1/2 years because obtaining the capital and technical manpower to improve and run the companies would take some time.

·         Privatisation may not completely solve the problem of epileptic power supply, but it should considerably solve the problem of transmission. However, electricity output will surely improve because no one wants to invest money and lose it.

·         Also, it is expected that end users will be saved from unnecessary and unfair billings because when privatised now, the investors will use the card system, which will only be effective when power has been supplied and consumed.

So, as you can see, government has not entirely taken its hands off. I know someone would ask why government still holds interest in the transmission and in DISCOs. For the GENCOs & DISCOs, the 20 per cent and 40 per cent held by the government is insurance for government that the people are the ones, who have invested to bring these companies to the way they are today. So, government holds this share in trust for the people. Power stability is still dependent on sincerity of the operator, be it government or private. If the buyers are not sincere about solving the problem of the epileptic power in Nigeria, there is little anyone can do about it

Also noteworthy is the fact that NITEL and its frequencies are still available for sale in a guided liquidation process that will commence soon.

In the transport sector, the Railway Bill, National Inland Waterways Bill, Ports and Harbour Bill, and National Transport Commission Bill are ready and soon to be sent to the federal legislature for passage. Reforms in the housing sector has equally reached advanced stages; adding that with over 18 million housing unit deficit in the country, the Federal Government has made the reforms in that sector a priority.

Conclusion: Nigerians are advised to know the DISCOs and GENCOs distributing and generating power to their respective zones in the coming months.

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Posted by on 06/11/2013 in Uncategorized

 

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