Why Power Outages Persist

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Benjamin Dikki, DG, BPE

Sam Amadi, chairman and chief executive officer, Nigerian Electricity and Regulatory Commission, believes there is a link between the current poor electricity supply in the country and the serious financial challenges facing the new core investors who bought the recently privatized distribution companies

By Anayo Ezugwu  |  Mar. 10, 2014 @ 01:00 GMT

THE Bureau of Public Enterprises, BPE, has set up transition committees to manage the process of handing over the Kaduna Electricity Distribution Company Plc and Afam Power Plc to core investors. Chigbo Anichebe, head, public communications, BPE, said the establishment of the committees was consequent upon the payment of 25 percent of the bid offers by the two companies that emerged successful following the opening of the financial bids for both firms.

He explained that by the constitution of the transition committees, the core investors now had access to vital information on the running of the Power Holding Company of Nigeria’s successor firms, adding that they could not have control of the companies until they had completed the payment for the firms. With a bid of $260.05m, Taleveras had, on July 31, 2013 beaten, TES Power to emerge the preferred bidder for Afam Power Plc, the last of the generating companies carved out of the Power Holding Company of Nigeria.

Taleveras consortium is made up of Alstom Nigeria Limited, an indigenous company involved in the supply, operation and maintenance of power turbines; Alstom Group, a French company involved in power generation and transport; and Taleveras Petroleum Trading BV, a British West Indian company involved in physical trading of crude oil and refined petroleum products. The Rivers State Government also has a stake in the consortium.

Amadi
Amadi

Similarly, Northwest Power Limited had emerged the preferred bidder for the Kaduna Electricity Distribution Company, the remaining of the 11 distribution companies carved out of the PHCN. The bidders for the KEDC were judged by the average technical, commercial and collection loss reduction they proposed to achieve should they acquire the controlling equity in the company. Northwest Power Limited offered to reduce losses by 29.26 percent. The second bidder, LEDA Consortium, offered an ATC&C of 26.71 percent, while the NAHCO Consortium offered 22.83 percent.

Afam Power Plc and Kaduna Electricity Distribution Plc were among the 17 PHCN successor companies that were earlier advertised for sale in December 2010, and both, along with the others, went through a tender process that culminated in the submission of technical and financial proposals in July 2012.

Meanwhile, the Nigerian Electricity Regulatory Commission, NERC, has linked the poor state of power supply across the country to the serious financial challenges facing investors who bought the nation’s electricity distribution companies. According to the commission, the Discos lack the financial muscle that will ensure efficient distribution of the generated electricity.

Sam Amadi, chairman and/chief executive officer, Nigerian Electricity Regulatory Commission, NERC, said  the Discos needed adequate financing to facilitate their operations. Amadi, who spoke on Monday, February 24, in Abuja while receiving a delegation from the United States Agency for International Development/Power Africa, outlined the immediate and long-term challenges facing the sector, including financing to facilitate further improvement, especially with regards to the distributions companies.

He noted that the current low-rate of gas supply caused by the vandalism of gas pipes was another inhibiting factor, which had stifled the capacity of the Discos. Amadi, however, noted that there had been improved dialogue between the power and gas sectors, which was not always the case before now. “Quick improvement in the industry is necessary to sustain the political will behind the power project,” he said.

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