FG Approves Sale of Three NIPP Gencos

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•  Plants sell power to the grid at N5 below other Gencos’ rate

By Chineme Okafor in Abuja 

Three electricity generation companies (Gencos) built by the Niger Delta Power Holding Company (NDPHC) under the National Integrated Power Projects (NIPPs) would soon be sold to private investors in continuation of the 2013 NIPP privatisation that was suspended, the Managing Director of NDPHC, Mr. Chiedu Ugbo, has disclosed.

The plants, which Ugbo said the resumption of their privatisation has been approved by the government, include the 634 megawatts (MW) Calabar, 1,076MW combined cycle Alaoji, and 506MW Geregu. He noted that the challenges that stalled their sales had largely been cleared and were now ready to be privatised.

Speaking in an interview at the weekend in Abuja, Ugbo explained that the government approved their privatisation because the transmission and gas supply troubles they had, had been resolved and that the market risks in the sector were being addressed.

He also noted that preferred bidders for the plants were still very interested in them as against thoughts that they might have lost interests.

Ugbo said: “This privatisation process started in 2012 and moved to 2013 with the emergence of the preferred bidders. At that time it was a mix of market issues and internal issues that had to do with gas supply, completion of the power plants and evacuation.

“Alaoji and Calabar had no evacuation facilities, the plants on the west side of Delta, from Sapele, Benin had gas supply problems. Shortly before I came in, the company got approval that once we finish resolving the issue of a particular plant we should go ahead and sell the plant.

“So, we were able to rush and finish the Ikot-Ekpene switching station and the transmission line to Calabar and the transmission line to Alaoji, as both of them come to Ikot-Ekpene where the power is sent to Ugwuaji and from there to the rest of the grid.

“So, that resolved the transmission challenge for Calabar and Alaoji. Total has finished the dedicated pipeline to Alaoji power plant and they have started supplying gas to the plant. Alaoji and Calabar both have gas evacuation facilities. We got approval for Calabar to be privatised, Alaoji was not included because it was under litigation. But the issue has been handled and Alaoji is back,” he explained.

According to him: “In Omotosho, gas was the only challenge and we are working on that. For Geregu, we are discussing with GACN and NPDC to finalise the gas supply agreement for that plant. So, in essence, we’ve finished what is our responsibility for the three and we are ready to go.”

On the market risks, Ugbo explained: “In 2014, the market was not bankable. It was difficult for bidders, as any lender coming to do due diligence on Nigerian market would just see what we were getting. That you would supply 100 per cent and get about 25 per cent. They (lenders) were saying that the market couldn’t guarantee their monies coming back.

“But we are still on the privatisation process because the preferred bidders are still interested as much as they were in 2013. We still have them and we are working with them as we try to close these three transactions,” he confirmed.

He noted that the NDPHC was also working with the Bureau of Public Enterprises (BPE) and National Council on Privatisation (NCP) to conclude the privatisation process, adding: “We are just waiting for certain approvals now if the options we are proposing are accepted.”

Insisting that the plants were still wanted by the investors, Ugbo said: “It is just to clear the market risks around the plants so that the lenders can provide the funds to the investors. The business must make sense before the lenders will put their money there.”

He also disclosed that the NIPP plants that are in operation were selling power to the national grid at a discounted rate, in addition to them not allowed to claim capacity payments.

Ugbo explained: “Our tariff is somewhere around N18 while the rest of the generation plants are about N23 per kilowatt hour. We are discussing this with NBET right now because it is what we met.

“They plugged in the 2012 number without escalation built into it, like inflation and all that, so while others kept going up, ours remained static, and that is one reason, but we are discussing because there is no reason why we should remain low particularly when we don’t get capacity payments,” he lamented.

  • Matthew Oye

    Im interested. i have foreign partners and funding. Contact me:matthewoyehomes@gmail.com

  • mohammed dauda

    PRIVATIZATION AGAIN UNDER THE WATCHFUL EYES OF PMB?
    Below answers my esteem readers better

    FASHOLA AND THE ENIGMATIC POWER SECTOR

    By Mohammed D. Eibo Adanu

    Despite the billions of naira spent in the
    revival of the nations’ power sector, the story of non performance, woes and
    technical know-how is same as present as the Super minister seemed to be an inexplicable
    situation himself because, many things have been heard from him and even the
    past governments seemed not to have the solutions to the dilemma why the sector
    was unbundled in the first place? The nations’ asset is seemed to be stolen in
    the disguise of privatization in a statement as amplified by our elder
    statesman in Nigerian politics, the former President Chief Olusegun Obasanjo. Just
    recently, PMB was in a vehement lamentation of the power sector in spite of the
    privatization with the new Operators at various DISCOS/GENCOS
    who are only interested in the jumbo
    salaries and unwholesome practices, carrying out any expansion is a taboo, I was told, they
    can’t even buy a D-iron or pin insulator, hence, the former Vice President,
    Alh. Atiku Abubakar, the Turakin Adamawa’s advice to the government of PMB and
    APC, to use the political will to
    reverse the sagacious privatization exercise of the Power sector that
    have made many Nigerians jobless, tariffs increment in form of extortion and
    darkness subjected to; and the African
    Industrialist Alhaji Aliko Dangote also who commented which almost re-awake a cured pile of the so ‘’called power investors’, the Hon. Speaker House of Representatives, Yakubu Dogara
    same story and now, Dr. Bukola Saraki, the President of the Senate in
    melancholic voice which goes thus: “Before we left for the break, myself, a select few of us and
    stakeholders in the power sector met to get an understanding of why no progress
    has been made thus far despite the best intention; and the revelations were
    mind-boggling.

    “There had been errors in the privatisation process
    and the model by which the power sector is being operated-whether at generation
    or distribution will never take us where we need to be. It has failed and
    nobody appears willing to tackle the issue head-on towards a permanent
    resolution, “he said.

    He said the Senate Committee on Power has been
    mandated to consult with the relevant parties to forge a path to solve the
    country’s crippling power deficit.

    “After all, if we are going to drive Nigerian
    industry, we need to resolve this and fast,” he said.

    Saraki reaffirmed the commitment of the Senate to
    ensure the passage of the Constitutional amendment saying “We must do this to
    ensure that our people begin to enjoy the benefits of the intended reforms
    which will help strengthen our unity, increase our prosperity and opportunity
    as we expand our liberty and happiness across the country.”

    On the 2017 budget, he said the Senate would
    immediately begin work earnestly on the MTEF to ensure passage by the end of
    the week.

    “In this way, consideration and debate on the 2017
    budget will immediately follow in the 3 “sitting days” of next week,” he said.

    On the Petroleum Industry, he urged the Executive to
    take positive steps to begin meaningful dialogue with those aggrieved in the
    Niger Delta to proffer lasting solutions.

    However, many Nigerians are asking these
    pertinent questions, whether the anti-corruption crusades is a selective
    justice? How come some look immune
    while, some are vulnerable to the onslaught? APC government should see all
    Nigerians as one people with a common destiny and as an injury to one is an
    injury to all, Senate Wednesday, September 21, 2016 finally kicked against sale
    of nation’s assets, as the sagacious PCHN privatization has appeared to be a
    sacred cow, as the waiting for PMB to reverse it seems imminent as speculated
    in many quarters remained to be seem. I have written over forty (40) published
    opinion articles about the power sector privatization, in particular respect to
    the defunct PHCN staff and NITEL whether they
    properly severed or short- changed, I knew a lot collected as severance package
    less than a million naira and are out of the service, and with the revelation
    and exposure, that: over billions of naira meant for these staffers who are in
    abject poverty is diverted to many individual pockets, I think, I have being vindicated and
    justified for my numerous opinion articles now that the powerful voices have
    spoken, what is Mr. PMB waiting for to act?

    More so, toeing and playing Political
    Ping-Pong with a Vital and Strategic National Infrastructure when previously
    sold are in jeopardy and needs resuscitation, now some perilous thinking
    senators are again suggesting for the further sales of the nation’s assets in
    order to get out of the current men made recession due to none planning,
    veracity for the raining day? In f act, nothing is forever-just like no one
    lives forever, riches and all other worldly acquisitions rightly or wrongly;
    leaving one’s indelible marks on the sand of time is simply the answer not
    selling the nation’s assets to looters, fraudsters, those who milked the
    economy dry is totally not the right thing to do but think inwardly, and to
    think about it, is that suggestion for the further of nation’s assets for their
    interest? Let me say that I have not seen any country in the world that is
    GAMBLING with its most vital National Infrastructures like Nigeria. All pioneer
    National Infrastructures from telecoms; PHCN etc have been destroyed in the
    disguise of privatisation. The country no longer has any heritage
    infrastructure that maybe available for children of the poor in the nearest
    future except for the looter. This will certainly foster further looting,
    frugality and impoverished of the less privileged ones in Nigeria. The sad
    story is that all the Billions spent from colonial days to today have gone down
    the drain because, none has achieved the desired objectives. The only remaining
    infrastructure power is on the road- to- ruins and is the subject of this
    paper.

    It is on record that since early 1990’s this
    country has been going through hell in the energy sector – unsteady fuel
    supply, power outage and general energy crunch and unending shortage with their
    attendance huge consequences on the economic and social well being of all. The
    importation of generators has become a big business while pollution with its
    environment degradation continues Nigerians spend billions that would otherwise
    be used for other economic activity on fueling the generators and servicing
    them as well as buying Chinese lamps to light their homes. With all these, no
    serious attempts have been made to solve the problems-Billions of USD have been
    spent on ‘’ Ghost-like projects’’ which
    have not added value to the infrastructure yet the contractors went home
    smiling while the ordinary Nigerians continue to scream and grumble with no any
    hope of getting relief and succor. Adding fuel to the fire. With all the
    numerous and compounded problems various committees reports ( Lukman,s report,
    the 21 Billion USD power report) are set up and their findings swept under the carpet. A ‘’ reform’’ was introduced, adopted
    and implemented without addressing the numerous problems of the power system.
    The key thrusts of the reform is privatization and the main aim and objectives
    was to buy or sell the companies to corrupt officials through their cronies
    .Whatever the good side of the reform (if any) this reform is sending the power sector into its grave.
    If care is not taken the power industry in Nigeria is heading to disaster.

    The
    Ministry of Power itself has been going through butchering and unfair treatment
    from the past successive governments. It is almost the only ministry that has
    been merged with other ministries like petroleum and now with works and
    housing. I am not x-raying future consequences of our current actions, not
    criticisms of PMB for this but because I am not privy to the reasons given by
    the technocrats to do so. Whatever the reasons and the justifications for
    this, I wish to request to him to have a
    second thought about the present arrangement creating a super ministry with
    huge and many super problems would not take us anywhere rather it would
    confound the problems and would worsen an already bad situation further.

    My
    plea is that the power ministry deserves to be accorded respect by being a
    ministry on its own right now with helm to remain apolitical, because, the
    power sector is capable of generating billion of naira daily to help cushion
    the paucity of fund current the bane of this PMB dispensation. It is strategic
    importance to the economy of every nation globally. The whole programmes for
    this administration resolve around the power industry, Transportation, Roads
    and Agriculture no doubt. A mistake is made is not impossible to correct. Wrong
    reasons and comparisons are being used to convince the government to press
    ahead with privatization of public asset. The example used and wrongly is the
    privatization of telecommunications. Let me say here that there was never
    privatization of telecommunication. NITEL which was supposed to be privatized
    ended liquidated .What happened in the telecom is liberation and opening the
    market for new operators to come in. the truth of the matter telecom was not
    privatized. I can proudly say I am in the thick of the NITEL privatization
    right from the start to the end of it.

    The result of the liberalization allowed
    investors and operators to come into the country. These investors came, bided
    for licenses, paid for it. They built their infrastructure from the scratch and
    continued to build and improve on it, bringing new services and improving
    customer choice and care. These telecoms companies are being run and managed by
    top class managers of the 1st tier grade in telecom management. The
    telecoms were and are still making impact on their customers.

    The
    power privatization is dubious, flawed and fraudulent and has not achieved
    anything but rather taking us back again. I was told by an impeccable
    sources that, GEJ never believed the privatization is the answer to the power
    sector squabbles and quagmires but was persuaded to so; but today GEJ is
    vindicated as the ailment with the power still remained even worst but can PMB
    prescribe the right drugs for full resuscitation ? That the new owners have
    failed to improve on the already existing bad situation which led to tinkering
    of privatization of the sector in the first place is absolutely clear.
    Look around you and point at one value that has been added to the electricity
    supply chain or the landmark achievement of the new owners. The vulture is
    feasting on the already decayed carcass. There is little or no remarkable
    investment in terms of engagement of competent manpower, upgrading the
    dilapidated infrastructure. This has resulted to repeated outages, load
    shedding, frequent tripping and collapse of the system which has become the lot
    of the power sector in recent times -Senator Shehu Sani.

    Those who attempted to cover the sun with their mere five fingers have seen the
    futility in their desperate bids to satisfy their masters to the detriment of
    national interest. The chicken has finally come home to roost and the lies
    could no longer withstand the potency of truth said Sunday regarding the power
    privatization. From Maiduguri to Port Harcourt and Enugu to Sokoto, the
    conspicuous evidences of lack of power supply to our homes, offices and
    companies are the same. It has indeed become a hopeless situation. The seeming
    lack of wisdom or refusal to make hay while the sun shines by the once-celebrated-technically-competent
    new owners has left the nation in a terrible dilemma of all time.

    The new investors have
    not brought any investments and some of them acquired the companies without
    paying. There is no significant improvement in the technical and commercial
    situation of the companies. The new owner’s main preoccupation is in the
    finances of the companies. The customer’s woes, fury, agony, frustration
    continue while the new owners are reaping what they did not sow there is no
    competition. While in telecom, there is a regulator who is using his regulatory
    stick even if not efficient to solve some customer complaints e.g. stopping
    unsolicited sms and other network problems, in the power sector, the regulator
    could not do his duties efficiently. Billing is still a problem. The system is
    characterized by outages; no alternative source (no competition at all)
    customers are forced to pay for what they did not consume. The Nigerians
    customers are held hostage by these new owners. There is virtually no corporate
    governance in these privatized companies. These companies are being managed by
    people who have no idea of what power business is. This is a recipe for
    disaster

    States
    government and some senators are still buying and deploying transformers in a
    supposedly private enterprise. Just last week I saw an advert by the Kaduna
    state government to procure transformers. Does any state government buy a base
    station for any of the GSM operators?
    CBN Intervention Fund –Bail Out or what?

    The
    mother of all scandals in the power privatization is the CBN intervention fund
    for the privatized power companies. This intervention fund is more than the
    purported prize of the 60% stake. The question is does it make any sense for a
    private investor to get an intervention fund from CBN and what is it for.
    Despite this intervention fund there has not been any appreciable improvement
    since the new owners took over. The question is where does all the money go to?
    And did the CBN monitor how the money was spent? And how would the CBN recover
    this money?

    I
    would continue raising questions and issues about the new owners handling these
    companies that would reveal the many factors that the government cannot ignore
    but justify the urgent need for review. Review would include but not limited to
    government takeover but investigating the whole process that led to choosing
    the winners, verification of the payments, forensic audit of the finances of
    the companies from take over date to date etc. Any new owner found to violate
    the Sale Purchase Agreement is held accountable and punished. Anyone who
    commits acts of illegality and fraud is charged.

    HRH, the Emir of Kano Sanusi Lamido Sanusi
    that the government does the needful about the Discos, reports that the Discos
    are broke etc. Apart from HRH SLS the overwhelming Nigerians want this exercise
    reversed. My candid advice to the government and based on the fact that this
    government has put the need of the people above anything to do what is required
    by reviewing this power issues. The country is shortchanged and the industry is
    on life support. Doing nothing is not an option and that this government should
    not be seen to kill the power industry by refusing to rescue and salvage it.
    The Hope and Change mantra should without delay be focus on the power industry.

    Conclusion,
    a word of vigilance to the government about the whole of privatisation exercise
    and the debate to further privatize nations’ assets is evil and must condemn in
    totality the future of this country. It
    appears that the government is stills bent on the privatization exercise at all
    costs and we as a people never learn lessons since we started and are always in
    a hurry to do things that are sold to us by Europe and America but we do not do
    them right as they do in their countries. We must do our things properly if we
    are to move forward. We have been calling for investors to come but any serious
    investor that looks what the way we do our things will not come. I ask the
    government to have solemn assessments of the exercise by addressing the
    corruption and other related lapses and correct them. 0therwise we shall
    continue destroying all of our infrastructures. The privatization agency needs
    total overhauling another energy Expert, Engr. S. Adamu lamented recently. Muhammed D. Eibo Adanu is a Media and
    Communications Specialist wrote via Email.mohammedeibo2014@gmail.com and can be reached on sms 08168127030

  • Enyi

    Good news but please they should sell them to professionals and not friends and family as GEJ did!