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Nigeria Approves Siemens, Korea Electric Power Grid Bids

By on October 31, 2012

Engineers Inspect Supergrid

Nigeria approved bids from companies including Siemens AG (SIE) and Korea Electric Power Corp. (KEP) for 10 state-owned power distribution companies, marking the end of a five-year privatization process.

The successful bids were worth more than $1.3 billion, the Abuja-based National Council on Privatization headed by Vice President Namadi Sambo said in an e-mail yesterday. Siemens led a group of four companies that won with a $135 million bid for the Eko Distribution Co., and Korea Electric headed the winning offer for the grid in the Ikeja region of Lagos, it said.

Buyers are required to provide bank guarantees “for 15 percent of the transaction value within 15 days of notification from the Bureau of Public Enterpirses,” the council said in the statement. Payment should be completed within six months, it said.

Nigeria, Africa’s top oil producer, is selling majority stakes in power plants and letting private investors buy as much as 60 percent of 11 distribution companies spun out of the former state-owned utility as it seeks private investment to curb power shortages. Blackouts are a daily occurrence in Nigeria, Africa’s most populous country with more than 160 million people. Demand for electricity in Nigeria is almost double the supply of about 4,000 megawatts and the government plans to boost output to 14,019 megawatts by 2013.

Structural Reforms

“This is an important step forward and probably the main area where the outlook for structural reforms is promising,” Samir Gadio, a London-based emerging markets strategist at Standard Bank Group Ltd., said today in an e-mailed response to questions. “What is encouraging is that the authorities have realized over time that the power sector would not be qualitatively reformed as long as a public entity remained the main player.”

Bids worth more than $700 million for five power plants were also approved by the privatization council, after the winners were announced on Sept. 25.

Other successful bids for power grids confirmed by the council were by companies including Meralco Industrial Engineering Services Corp., Aurecon Australia Group Ltd. and Copperbelt Energy Corp., Calcutta Electric Supply Corp. and Turkey’s Kayseri & Civari Elektrik TAS.

 

Source: Bloomberg