BPE Rakes in $90.75m for Eko, Yola, Ibadan Discos

15 Mar 2013

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General Abdulsalami Abubakar

•FG to issue $1bn bond for gas, electricity sectors

James Emejo and Chineme Okafor

As investors rush to beat the March 21 deadline for the payment of 25 per cent of the transaction value of the 15 power utilities being privatised by the Federal Government, two more companies – Integrated Energy Distribution and Marketing Limited and West Power and Gas Limited (WPG) – paid a total of $90.75 million to the Bureau of Public Enterprises (BPE) this week.

The 15 companies, comprising five generation companies (Gencos) and 10 distribution companies (Discos), were created from the unbundling of the Power Holding Company of Nigeria (PHCN) under the power sector reform and privatisation programme.

Integrated Energy, which won the bids for Yola and Ibadan Discos, sources in the BPE confirmed yesterday, paid $57 million for both assets on Wednesday. The sum, sources said, represents 25 per cent of the bid price for both utilities.

The firm, which is chaired by former military head of state, General Abdulsalami Abubakar, is fronted by the trio of Tunde Ayeni, a businessman and chairman of Skye Bank Plc; Captain Osa Okunbor; and Dr. Sola Ayandele. It will be expected to pay the balance of 75 per cent within the next six months.  

In addition, WPG Consortium, the BPE confirmed, paid $33.75 million for Eko Disco on Tuesday, being the mandatory 25 per cent initial payment of the transaction value for the distribution asset.

Like Integrated Energy, WPG will be expected to pay the balance of 75 per cent of the bid price for Eko Disco within six months.

The consortium, WPG Limited, comprises Nigerian and international entrepreneurs led by businessman Mr. Charles Momoh; a medical doctor and major contractor in Lagos, Dr. Tunji Olowolafe; and Mr. Ernest Orji.

The consortium has Siemens as its technical partner and has an array of advisors, including Africapital Management Limited, while Global Emerging Markets is its transaction and financial advisers, Norton Rose of UK and George Etomi & Partners are its legal advisers and Sohn Associates, its technical advisers.

Eko Disco has a customer base of about 320,000 electricity consumers spanning 11 business units that include Agbara, Ajele, Apapa, Festac, Ibeju, Ijora, Lagos Island, Lekki, Mushin, Orile and Ojo.

With the payment made by Integrated Energy and WPG, this brings to four the number of bidders, which have paid the mandatory 25 per cent to the BPE for five of the power assets before the deadline.

Last week, Amperion and NEDC/KEPCO respectively paid 25 per cent of the transaction value for the 414MW Geregu power station and Ikeja Disco.

In the meantime, the Federal Government has unveiled plans to raise about $1 billion through the issuance of a bond to advance growth in Nigeria’s gas and power sectors.
Making this known Thursday, the Minister of Power, Professor Chinedu Nebo, explained that the bond would afford the Nigeria Bulk Electricity Trading Company (NBET) the necessary financial backing to procure electricity from generation companies for onward sale to distribution companies in line with the power purchase agreements (PPA) and vesting contracts signed by participants in the Nigeria Supply Industry (NESI).

But NBET, THISDAY learnt, will be a part beneficiary of the $1 billion bond to the extent that it will allow it function effectively.

Nebo, in a meeting with a delegation from the United States Agency for International Development (USAID), said that the government was anxious about the timely conclusion of the privatisation of state-owned power firms carved out from PHCN.

He stated that the liberalisation effort in the power sector would proceed as planned and in line with the sector roadmap which was recently reviewed to take in the contemporary gaps and shortfalls.
“We must hit the ground running, we do appreciate the enormous work you have done in the past, especially in the area of capacity building.
“We need more help now even in the area of strengthening of institutions that will implement our plan,” Nebo said.

Tags: Business, Nigeria, Featured, BPE, Eko, DISCOS

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