FG Generated N135bn from Afam Genco, Others

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The Bureau of Public Enterprises (BPE) has disclosed that the federal government generated N135 billion from its privatisation of four power assets in the country to support the 2019 budget.

In a statement, the agency stated that the privatisation of Afam power generation company (Genco), Afam Three Fast Power Genco, re-sale of government shares in the Yola electricity distribution company (Disco) as well as the sale of 29 per cent of the federal government’s shares in the Geregu Genco provided the funds.

According to the statement, the government had mandated the BPE to fund the budget by N220 billion. It explained that the N135 billion was part of its expected contribution to the budget.

It stated that its Director General, Mr. Alex Okoh, disclosed this at a meeting in the National Assembly.
The National Council on Privatisation (NCP) had recently approved Transcorp Power Consortium as the preferred bidder for the Afam Genco which included the Afam fast power in a renewed privatisation of the power assets with a bid price of N105.3 billion or $343.6 million as well as Diamond Stripes Consortium as the reserve bidder with a price of N102.3 billion.

The NCP reportedly noted that the winning bid of $343.6 million for the power plant was above the winning bid of $265 million in the previous privatisation transaction conducted in 2013, and that Transcorp Power Consortium would invest $350 million in the firm over a period of five years after taking over.

It equally approved Quest Electricity Nigeria Limited as the preferred bidder for the re-privatised Yola Disco with a bid price of N19 billion or about $62 million which it added was above the $59 million paid by the previous core investor of the Disco in 2013.

The BPE explained that at the first meeting of the NCP for 2019, which held in April, it granted approval to Diamond Stripes Consortium, Transcorp Power Consortium and Unicorn Consortium to proceed to the financial bids opening stage for the acquisition of 100 per cent shares in the Afam Genco, having met the benchmark score of 750 points after evaluation in accordance with the criteria set out in the Requests for Proposal (RfPs).

The NCP also directed Quest Electric Nigeria Limited to proceed to the financial bids opening stage for the re-privatisation of the Yola Disco.

The BPE stated that the privatisation of Afam Genco could not be concluded during the first round of the power privatisation exercise in 2013 due to issues related to gas supply to the plant.

It added that the termination of the Share Purchase Agreement (SPA) signed between Taleveras – the then preferred bidder for Afam Genco, gave way for the NCP to in 2017, approve the privatisation of the Genco based on a strategy to be recommended by the transaction advisers.

For the Yola Disco, it said even though it was successfully privatised and handed over to the core investor in 2013, a force majeure was declared in 2015 by the core investor citing insecurity in the northeast region of the country, after which the Disco was duly repossessed by the federal government.

The statement said Okoh advised the government to consider privatising its enterprises to fund the N10.33 trillion 2020 budget, with a total deficit of N2.28 trillion.

He equally noted that there was no justification for the yearly budget deficit with local and external borrowings when there were national assets that could be converted into liquidity to fund the government’s fiscal programmes.
“It is not good to keep borrowing on a yearly basis to finance deficit budget when a lot of very valuable national assets are lying fallow and moribund.

“Proceeds from outright privatisation or concession of the moribund assets, should serve as veritable sources in funding the budget since the assets are more or less, becoming national liabilities,” said Okoh.