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Power investors pay 25% of offer ahead deadline

By on March 17, 2013

There is excitement in the power sector as three major preferred bidders who are said to have stake in over 60 percent of the distribution segment of the market have made requisite payments to Bureau for Public Enterprises (BPE), preparatory to acquisition of the companies.

BusinessDay investigations reveal that payments by all the preferred bidders are going to be made through Nigerian banks, unlike in the past privatisation exercises where payments were made through foreign banks. This, according to our sources, provides comparative comfort for the bidders to meet the March 21, 2013, deadline.

Already, KEPCO/NEDC and West Power and Gas Consortium have paid for the Ikeja Distribution and Eko Distribution companies, respectively, while the preferred bidder for Ibadan Distribution Zone, touted to be the largest, will make payments today.
With these payments, the expected rejuvenation of the power sector is indeed underway. The payments are coming ahead the March 21 deadline set by the BPE.

The National Council on Privatisation (NCP) only last month approved the sale of four generating companies to their bidders. These include Geregu Power Plant, which was acquired by Amperium Consortium and for which $33 million, including local component of N519.12 million have been paid. This represents 25 percent of the $600 million offer money.

Others are Egbin Power Plant in Lagos, the largest and controls 1,230 megawatts, which was sold to KEPCO at $407.3 million. The duo of Olorunsogo and the Omotosho power plants in Ogun and Ondo, respectively, have been sold to the Chinese firms constructing them.

West Power and Gas payment of $33.75 million for Eko Power distributing firm this week represents the mandatory 25 percent of its bid offer. The consortium had offered $135 million for the 60 percent of the Federal Government equity in the power firm.
West Power and Gas paid in two tranches, and is expected to pay the remaining 75 percent within six months.

The consortium comprises Alpha Consortium Limited, Atlantic Meridean, Africa Infrastructure Investment Fund 2 Mauritius and Siemens Limited of Germany.

The NCP had in December 2010, advertised for Expressions of Interest (EOIs) from prospective core investors interested in acquiring controlling stake in the 11 successor distribution companies (Discos) created out of the Power Holding Company of Nigeria.
The Council by March 4, 2011, the deadline for submission of EOIs, had 180 applications for the 11 Discos. After the evaluation of the applications, 80 bidders were shortlisted out of which 72 emerged at the deadline for the payment of the mandatory data room access fee of $20,000.

All the pre-qualified bidders were given access to the virtual data room from September 1, 2011, to July 31, 2012, when they submitted their proposals.
Pre-qualified bidders were also allowed to visit the distribution companies and physical data rooms that were located within the franchise area of each distribution company.

By the bid submission deadline of July 31, 2012, the BPE received 54 proposals from pre-qualified bidders. The received bids were opened and sorted out on August 1, 2012. All the 54 bids were confirmed to be complete in terms of having both commercial and technical proposals.

Out of the 54 bids, 10 of them failed the first test of completeness and responsiveness. The remaining 44 bids were then subjected to full technical evaluation. Out of the 44 bids, 32 bids submitted by 20 different bidders scored the minimum of 75 percent required to progress to the next stage in the process.

The final approval of the preferred bidders by NCP and its announcement for the successor companies was done on October 23, 2012, for the Discos.

The Nigerian electricity industry has been unbundled into generation and distribution companies and a single transmission company with a view to encouraging private sector participation, and attracting foreign and local investment to ensure economic and reliable electricity supply.

 

[Business Day]