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FG to sell 70 pct stake in power distribution companies

By on September 20, 2011

Nigeria Federal Goverment  plans to sell a 70 percent stake in eleven power distribution companies to new investors as part of a multi-billion dollar privatisation of its electricity sector, the Bureau of Public Enterprises said on Tuesday.

A BPE statement said 10 percent out of the remaining shares would be offered to state governments where power plants are located, while 18 percent will be sold through an initial public offering when the companies start performing.

It didn’t disclose how much it expected to receive for the stakes but said the net proceeds would be transferred to the federation account for distribution to all the tiers of government.

Frequent electricity blackouts have long been a brake on growth in sub-Saharan Africa’s second biggest economy, despite huge potential returns for investors in a nation of 150 million people.

The BPE said in June it had short-listed 525 bids for the next round of the privatisation process and that successful bidders would be required to pay $20,000 fee for each asset they wanted to buy and sign an exclusivity agreement before going into negotiations for the assets.

Short-listed companies range from global utilities to private equity investors and infrastructure funds. Bidders included local conglomerate Dangote Industries Ltd, China’s Southern Power Grid, India conglomerate Essar and Tata, private equity firm Actis, Kenya Electricity Generating Company (KENGEN) and Oando .