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NCP yet to decide on TCN sale

By on October 10, 2014

With so much said already about the privatisation of the country’s power infrastructure backbone, Transmission Company of Nigeria, indications have emerged that the National Council on Privatisation has yet to meet on the matter.

Without the council meeting to discuss the subject, no decision can be taken on the sales of the national asset.

This, however, means that the transaction advisers for the sales process cannot be appointed, as the appointment of such advisers cannot happen without the NCP deciding on the intended TCN sale.

Confirming this, a top official at the Bureau of Public Enterprises, who would not want to be quoted, told our correspondent in confidence that, “The Council will have to meet and decide whether TCN will be privatised; then the transaction advisers will be appointed. The appointment of transaction advisers is announced by the Council through whosoever it appoints.”

The NCP is the apex body charged with the overall responsibility of formulating and approving policies on privatisation and commercialisation.

It determines the political, economic and social objectives of privatisation and commercialisation of public enterprises, and approves guidelines and criteria for valuation of public enterprises for privatisation and choice of strategic investors.

The Council also approves the legal and regulatory framework for the public enterprises to be privatised, and determines the mode of sale of shares of a listed public enterprise and to advise the Federal Government accordingly.

Some stakeholders in the power industry have attributed the high rate of bureaucracy in the industry to the activities of TCN.

The recent privatisation of the power sector, our correspondent learnt, was still being challenged by the bureaucracy in the TCN, as most documents driving business in the industry still passed through the TCN for necessary approvals.

Recently, the Nigerian Electricity Regulatory Commission said power distribution companies were free to discuss with unlicensed promoters to drive the embedded power generation scheme.

Discos now have the go-ahead to discuss with any promoter as long as NERC’s procurement policies are strictly adhered to.

The prevalence of bureaucracy in the TCN, sources in the power sector told our correspondent, was one of the major reasons the NERC decided to allow this.

If in the course of bidding for business, an unlicensed promoter wins, such unregistered operator could then apply for a licence.

Embedded generation/distribution is electricity generation that you get outside the national grid through a bilateral agreement between the generator (that is the company that generates the power) and the distribution company.

The Federal Government is currently considering offers of more than $20bn for the assets of the TCN as the provision of adequate power continues to pose a challenge to the economy.

The Minister of Power, Prof. Chinedu Nebo, recently told Bloomberg that aside privatising TCN, the government will also focus on developing renewable energy projects to diversify its supply of electricity, he said.

Transmission is the only segment of the power industry that the government still controls as it seeks to curb regular blackouts in the country. Nigeria generates about a tenth of the power that South Africa does even though the former’s population of about 170 million is more than three times larger than that of the latter.

“The current transmission capacity of Abuja-based TCN is 5,500 megawatts compared with an installed generation capacity of 8,000 megawatts. This means that if generation companies were operating at full capacity, the grid would be unable to transmit all of the power to homes. The government wants transmission capacity to exceed 6,000 megawatts by 2016”, Nebo said.

Power generation is significantly lower than capacity, partially due to problems of transporting gas to power plants. Many companies and individuals are compelled to use diesel-powered generators to ensure adequate electricity.

“Gas supply has been a limiting factor,” said Nebo, who is working with Minister of Petroleum Resources, Diezani Alison-Madueke, to make enough gas available to generation companies to match the transmission capacity by the end of next year.

“Nigeria is moving in the direction of trying to have a robust energy mix,” he said.

Officials are deciding which model to adopt for the company’s sale. Manitoba Hydro-Electric Board of Canada’s three-year management contract ends next year. The process could take the form of a public-private partnership, a concession or a build-operate-transfer, Nebo said.

While divesting from most other parts of the power industry, the government is planning to invest more in renewable energy such as solar and hydro power, Nebo said.

 

[Punch]