Power
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The Nigerian Electricity Regulatory Commission, bars successor generation and distribution companies of PHCN from participating in the sale of NIPP plants in order to prevent oligopoly in the power sector
| By Anayo Ezugwu | Sep. 9, 2013 @ 01:00 GMT
IN its bid to prevent oligopoly and market rigging in the Nigerian power sector, the Nigerian Electricity Regulatory Commission, NERC, has barred core investors of the successor generation and distribution companies of the Power Holding Company of Nigeria, PHCN, from participating in the sale of the National Integrated Power Projects, NIPP. Sam Amadi, chairman, NERC, said the rule is aimed at expanding the number of players in the sector to foster better competition.
According to him, no core investor or dominant player will be allowed to buy the assets put on sale by Niger Delta Power Holding Company, NDPHC. He said only minority investors like institutional investors such as the Africa Finance Corporation, who are themselves subject to regulation can participate. “We want to make the market competitive. We also want to ensure that nobody can have more than one plant. As long as the government’s intentions are hinged around transparency and accountability, the government should facilitate more private sector investments in the energy sector at the national and local levels for the purposes of diversification,” said.
Already, the six PHCN successor generation companies are currently being sold to private investors. Bidders for five of the plants have paid up the 75 percent balance of the bid price. The generation companies include Egbin Power plc, Kainji Hydro Electric plc, Sapele Power plc, Shiroro Hydro Electric plc and Ughelli Power plc. The NIPP generation portfolio comprises 10 gas-fired power plants with a combined design capacity in excess of 5,453 megawatts at ISO conditions and 4,774mw (net) with each of the power plants incorporated as a subsidiary company of the NDPHC.
Ademola Oshodi, project manager, Nigerian Natural Resource Charter, said that the ideal number of players in the electricity generation business should be about 25, stressing the need to ensure that no one single entity is responsible for generating more than 10 to 15 percent of total generated power in the country. He noted that there is need to keep constant watch to prevent unholy mergers, adding that over the years, good business practice will set out the effective players. “If they want to raise capacity, let them do it with the assets they have already purchased. No question of right of first refusal just because you bought a PHCN asset and a nearby NDPHC asset is being offered for sale,” he said.
The NDPHC, owner of the NIPPs, recently announced the decision to sell 80 percent of the 10 power plants, which was informed by government’s intention to involve private sector operators who have the technical know-how to run the plants in an efficient manner. The 10 generation plants include Gbarain (225mw), Ihovbor (450mw), Omotosho (500mw), Egbema (338mw), Omoku (250mw), Geregu (434mw), Calabar (561mw), Ogorode (Sapele 450mw), Alaoji (1,074mw), and Olorunsogo (750mw).
Many investors have been scrambling for the power plants in what is the second wave of the privatisation of power assets in the country. Over 386 firms were said to have been short-listed for the sale of the 10 plants.
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