Preferred bidders of PHCN successor companies who have completed their bid value payment have got government take-over nod
| By Anayo Ezugwu | Oct. 7, 2013 @ 01:00 GMT
IN its bid to wind-up the privatisation of the Power Holding Company of Nigeria, PHCN, the National Council on Privatisation, NCP, on September 20, approved the handover of the successor companies to the preferred bidders. The decision was taken at the council’s meeting held in Abuja, on September 20, following the approval of the payment of the remaining 75 percent by 14 out of the 15 bidders for the acquisition of the 15 PHCN successor companies.
Among the payments approved by the council were those of the 12 companies that met August 21, deadline namely: Amperion Power Company Limited for Geregu power plant, Transcorp/Woodrock for Ughelli power plant, Integrated Energy Company for Ibadan power plant, NEDC/KEPCO for Ikeja power plant, Vigeo Power Limited for Benin power plant, Aura Energy Limited for Jos power plant and Integrated Energy Company for Yola power company. Others were Mainstream Energy Limited for Kainji power plant, West Power and Gas for Eko power plant, Kann Consortium for Abuja power plant, 4Power Consortium for Port Harcourt power plant and Sahelian Power SPV Limited for Kano power plant.
The Council also approved the late payments by North South Power, for Shiroro Power Plc and Interstate Electric Limited, for Enugu Distribution Company Plc, respectively. But the approvals were subject to the late payment penalty as provided in clause 12.20 on interest for late payment and clauses 5.5, 5.5.1 and 5.5.2 of the Share Purchase Agreement, SPA. However, the council referred the case of CMEC/EURAFIC consortium, the preferred bidder for Sapele Generation Company to the Office of the Attorney General of the federation and minister of justice and legal committee of the NCP for advice. The move became imperative in order to resolve the identified legal issues, as the group had paid more than 50 percent of its bid cost or $119,887,156 of the $201,000,000.
The NCP also directed the office of the accountant general of the federation to ensure that all staff entitlements are fully paid before the end September 2013. The council equally approved the protocol for the physical handover of the successor companies to the bidders that have fully paid the remaining 75 percent for the acquisition cost.
It would be recalled that in December 2010, the NCP advertised for expressions of interest from prospective core investors in acquiring controlling stake in the 11 successor distribution companies and the six generation companies created out of the PHCN. All the prequalified bidders were virtually given access to the data room from September 1, 2011, to the proposal submission date of July 31, 2012.
The pre-qualified bidders were also allowed to visit the distribution companies and physical data rooms that were located within the franchise area of each company. However, on or before the March 21, deadline for payment of the initial 25 percent of bid consideration, all the preferred bidders for the 15 successor companies complied. At the expiration of the deadline, the BPE had received $559,445,573.96 from 14 bidders for 15 successor companies. The Nigerian electricity industry was unbundled into generation, distribution and transmission companies with a view to encouraging private sector participation and attracting foreign and local investment into the Nigerian power sector to ensure economic and reliable electricity supply.
Benjamin Dikki, director-general, Bureau of Public Enterprises, said the new investors are expected to inject about $1.8 billion into the operations of their companies. He explained that the funds injection would be for metering, expansion, connection of new consumers, safety, health and environmental issues. According to him, the decision of the federal government to engage Manitoba Hydro International, MHI, as management contractors for the Transmission Company of Nigeria, TCN, was to place the TCN on the path of best practice, reliability and self sustenance. It was also to ensure predictability and security of the transmission system.
He said that a well-managed TCN was critical to the success of the multi-billion Naira National Integrated Power Project, NIPP, which is expected to give the nation’s electricity power supply a quantum leap in the next few years. “The management contractors would bring invaluable experience on the sector development, provide clear targets and incentives, build capacity of TCN staff to prepare them for future roles, post-management contract and completion of the unbundling and independent operation of the system and market operator functions into an independent system operator, thus allowing the entities to concentrate on their core functions,” he said.