NERC’s Chief Executive Officer, Dr. Sam Amadi
By Stanley Nkwazema and Chineme Okafor
The National Electricity Regulatory Commission (NERC) has revealed that companies which won bids for state-owned power generation assets put up for sale or concession would still undergo a “fit and proper” scrutiny.
NERC’s Chief Executive Officer, Dr. Sam Amadi, said the commission is looking into the memorandum submitted by the companies to determine whether the local firms and their foreign partners possess the technical and financial capacity to manage the assets.
The commission’s head also disclosed that they are conducting checks on the individuals involved in the transaction to find out if they are “fit and proper” to run the unbundled companies on behalf of Nigerians.
Amadi added that the report would be sent back to the president before the curtain is drawn on the exercise.
“We want to make sure that we have only competent companies to run the companies. It is not only submitting the MOU on the technical agreements that matter; but we must ensure that the foreign companies used to win the bids have stakes in the day-to-day running of the companies.
“They must have the financial capacity and must show commitment they will not dump their Nigerian partners and send us back to the previous situation of irregular power supply,” he said.
He also noted that the issue of power and the privatization exercise have security implications. "We must ensure that we do the right thing so that Nigerians won't come back to blame us or embark on strike, violence or vandalisation if the winners are not properly screened to find out their financial, human and technical capability to manage the assets”.
Apart from the NERC, the Asset Management Company of Nigeria (AMCON) is also conducting checks on the successful companies with regard to their debt profile.
Chairman of the Technical Committee of the NCP, Mr. Atedo Peterside, had echoed a similar sentiment during the opening of the financial bids submitted by investors which had shown interest in acquiring the power assets in Abuja last week. He cautioned the jubilant representatives of the successful companies to be mindful of the fact that their emergence as preferred bidders was still subject to the approval of NCP and that they could still be denied the opportunity of taking over the companies if they failed to pay their fees or if they were found wanting in documentation during post-bid assessment.
He added that the winners should not deem themselves "preferred bidders" yet until confirmation by the NCP and their ability to make a letter of credit or bank guarantee for 15 per cent of the bid amount.
"They will be given 15 business days after the NCP approval to comply and be designated preferred bidder," he explained.
During the financial bid opening, Transcorp, alongside its partners, offered $300 million to emerge the preferred bidder for the 360 megawatts (mw) Ughelli power plant in Delta State.
Transcorp beat two other bidders, including Feniks Electricity and Amperion Power Distribution Limited, which offered bid prices of $54 million and $252 million respectively. Both Transcorp and Amperion's bid prices were, however, said to be above the reserve price, which enabled Amperion to emerge the reserve bidder for the Ughelli plant. The Amperion Group is jointly owned by Israeli-based BSG Resource Limited, State Grid Corporation of China and their local partner, Forte Oil.
However, Amperion's $128.52 million as the sole bidder for the 414mw Geregu power plant fell below the reserve price of $132 million to acquire a 51 per-cent stake and was offered the chance to match the reserve price to win the power plant.
Also, CMEC/Eurafric Energy, comprising a Chinese firm and Eurafric, a Nigerian oil and gas firm owned by Tony Onoh, offered $201 million to secure the 120mw Sapele power station, thus defeating its contender JBN-Nestoil (Julius Berger Nigeria Plc-Nestoil), which offered only $80 million initially.
JBN-Nestoil, however, was allowed to revise its bid price to $106.5 million, a figure declared by the NCP to have exceeded the reserve price. By revising its price upwards, JBN-Nestoil automatically emerged the reserve bidder for the Sapele plant.
Meanwhile, Mainstream Energy Solutions Limited, which has ties to Bello, Akhigbe, Ogbeha and Alhaji Ismaila Isa Funtua, Chairman of Bullet Construction Company and patron of the Newspaper Proprietors' Association of Nigeria (NPAN), who is the vice chairman of the consortium, was also the sole bidder for the Kainji-Jebba hydro electricity plants, as Mainstream offered $50,760,665.18 as fixed annual fees for the facility.
Also, for the 600mw Shiroro power facility, North-South Power Limited offered to manage the firm under a concession for a fixed annual fee of $23,602,484.47 including a commencement fee of $111,654,534.30.