Gen Abdulsalami Abubakar
The National Council on Privatisation (NCP) alongside the Bureau of Public Enterprises (BPE) Tuesday unveiled the commercial bids submitted by investors who had been prequalified to have their bids opened for the 10 distribution companies (discos) slated for sale under the power privatisation programme.
The Federal Government is expected to realise about N197.25 billion from the sale of the 10 discos, according to the Chairman, Technical Committee of the NCP, Mr. Atedo Peterside.
Leading the winners’ chart was Integrated Energy Distribution and Retail Marketing Limited, which is chaired by former military head of state, General Abdulsalami Abubakar (rtd).
The company emerged the preferred bidder for four power distribution utilities, comprising Yola, Ibadan, Eko and Ikeja Discos, by submitting average technical, commercial and collection (ATC&C) loss reduction figures of 18.58 per cent, 17.46 per cent, 21.43 per cent and 22.51 per cent for the respective discos.
But owing to the rules of the power privatisation process that do not allow a company to own more than two discos, sources close to Integrated Energy said that it would indicate a preference for acquiring Ibadan and Yola Discos thus foregoing Ikeja and Eko Discos.
Other key members and financiers of Integrated Energy include the Chairman of Skye Bank Plc, Mr. Tunde Ayeni, businessman, Captain Osa Okunbor, and Dr. Shola Ayandele, who has superintended the transaction on behalf of the consortium.
Integrated Energy is partnered by the Philippines' largest power retailer, Manila Electric.
With Integrated Energy’s decision to give up Ikeja and Eko Discos, the reserve bidder for both assets, Korea Electric Power Corporation (KEPCO)/New Electricity Distribution Company (NEDC) Consortium, which is partnered by local energy firm – Sahara Enery – will be invited to select one of the two Lagos-based distribution companies.
Although KEPCO/NEDC emerged the reserve bidder for the two Lagos-based companies, owing to anti-trust and competition issues, the rules of the privatisation process also bars a single investor from acquiring both discos.
However, Interstate Electrics Limited, which is fronted by Emeka Offor, won the bids in both Abuja and Enugu Discos. The Interstate Consortium comprises Chrome Energy, Power House International Limited and Metropolitan Electricity Authority (MEA) of Thailand.
It beat Eastern Electric Nigeria Limited, a consortium backed by the four South-eastern states, except Imo; oil and gas service provider, Nestoil; and Geometric Power Limited, a company owned by the former Minister of Power, Prof. Bart Nnaji.
Commenting on the process yesterday, Chairman, Power House, Mr. Kester Enwereonu, said that the combined balance sheet of the consortium members was in excess of $20 billion, which shows that they have the financial muscle to finance the acquisitions and upgrade both networks.
In the bid for the Benin Disco, Vigeo Power Consortium, partly owned by Mr. Victor Gbolade Osibodu, a businessman, edged out Southern Electricity Distribution Company Limited to emerge the preferred bidder.
Vigeo’s commercial bid had an ATC&C loss reduction or efficiency ratio of 21.78 per cent, relative to Southern Electricity’s 17.72 per cent.
The Vigeo Consortium comprises Vigeo Holdings Limited, Global Utilities Management Company Limited (GUMCO) and a private equity firm, African Finance Corporation.
Its technical partners include Indian-based Tata Power Distribution Limited (TPDDL), the Calcutta Electric Supply Corporation Limited (CESC) and GUMCO.
The Jos, Kano and Port Harcourt Discos, which had sole bidders, were won by Aura Energy Limited, Sahalian Power SPV Limited and 4Power Consortium with ATC&C loss reduction of 16.22 per cent, 21.21 per cent, and 19.55 per cent respectively.
The big losers Tuesday included the Oando Consortium and Honeywell Energy Resources International Limited, which had the backing of former Governor of Lagos State, Senator Bola Tinubu and the Lagos State Government; Western Consortium, which also had the support of Oando and Tinubu; Southern Electricity; and Eastern Electric.
Speaking on the bid process, Peterside told journalists after the exercise that the next stage would be to collate and carry out tests for consistency in line with the rules guiding the bids.
He said the results would subsequently be announced by the NCP.
According to him, “The percentages are loss reduction estimates which are passed down to the consumers; so that by rule of thumb, the person offering the highest loss reduction percentage is also offering indirectly the highest discount on consumer tariffs in his own zone.”
Also, Director-General, BPE, Ms. Bolanle Onagoruwa, cautioned that it was not yet over for the winners.
She said: “The next process is to evaluate the commercial bids that they have presented. What they have done is that they have come up with this loss reduction targets and the person with the highest loss reduction target is ranked first but in being ranked first, you must also be able to show that loss reduction target is consistent with the business plan that you have submitted.”
Bidders were ranked based on ATC&C loss reduction proposals submitted to the BPE with their technical proposals.
The purchase price for a 60-per-cent stake in Abuja Disco as set by the Nigerian Electricity Regulatory Commission (NERC) was N25.799 billion, while that of Benin was N20.215 billion.
Also, N21.182 billion was determined for the Eko distribution facility, while that of Enugu was valued at N19.803 billion.
The purchase price for Ibadan was put at N26.505 billion; Ikeja, N20.638 billion; Jos, N12.852 billion; and Kano, N21.438 billion.
Others are Port Harcourt and Yola Discos, which were valued at N19.506 billion and N9.312 billion, respectively.
The bidders will be expected to pay 15 per cent of the purchase price once the NCP approves their selection as preferred bidders, another 25 per cent of the amount will be paid 15 days after the execution of the Share Purchase Agreement, while the balance will be paid within six months thereafter.
In a related development, it has emerged that Rockson Engineering was disqualified from participating in yesterday’s bid process, and not blacklisted.
The company was said to have been disqualified by the BPE after it failed to pay the bid bond to have its commercial bid opened. Rockson had submitted bids for Ikeja, Port Harcourt and Benin Discos.
Similarly, information made available to THISDAY showed that Amperion Power Distribution Company Limited, backed by businessman, Femi Otedola, had written to the BPE on October 10 indicating its decision to withdraw from the commercial bid process.
Amperion, which had submitted a bid for Ikeja Disco, was said to have informed BPE that it had decided to concentrate solely on power generation for the time being.
Amperion on September 25 emerged the preferred bidder for the 414mw Geregu power station.