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Gas supply problems stall power plants’ sale – BPE

By on November 13, 2014

The sale of the 10 power plants constructed under the National Integrated Power Project has been stalled by gas supply challenges, the Bureau of Public Enterprises has said.

The Head, Public Communications, BPE, Mr. Chigbo Anichebe, disclosed this in a telephone interview with our correspondent in Abuja on Tuesday.

The NIPP plants are located in Alaoji, Benin, Calabar, Egbema, Gbarain, Geregu, Ogorode, Olorunsogo, Omoku and Omotosho.

Anichebe said the BPE had not been able to sign Share Purchase Agreements with the prospective core investors in the power plants as a result of the failure to secure Gas Supply Agreements for the plants.

The BPE spokesperson also confirmed that the absence of gas supply agreements was also affecting the conclusion of the sale of one of the successor companies of defunct Power Holding Company of Nigeria, the Afam Power Plant.

The National Council on Privatisation and the Governing Board of the Niger Delta Power Holding Company had at their third joint meeting in March approved the opening of the financial bids of 42 prequalified bidders.

The 42 bidders that had been prequalified met the criteria set in the Requests for Proposal and passed the due diligence verification conducted on technically qualified bidders.

After the financial bid opening in March, core investors emerged for the 10 power plants but the NCP approved the bids for seven of the plants, while three were left pending the resolution of legal issues.

Anichebe told our correspondent that without securing gas supply, the prospective core investors would not be able to muster the financial resources to pay for the power plants.

He said, “Without gas supply agreements, the plants are simply not bankable. It will not make sense to the banks to lend money to an investor who is not sure of gas supply in the next two years.

“It is expected that when they pay, they should start producing and selling power; but without gas supply, they cannot do this. That is why gas supply is critical to the transaction.”

The 10 plants are jointly owned by the three tiers of government, with the Federal Government having 47 per cent equity stake and the local and state governments sharing the remaining 53 per cent.

For the sale of the power plants, a Joint Technical Transaction Committee chaired by Governor Gabriel Suswam of Benue State was set up.

The JTTC is made up of the technical committees of the NCP and NDPHC.

The BPE had on November 8, 2013 received 66 proposals from prospective investors interested in the NIPP plants.

An inter-agency evaluation team, including security agencies, met to evaluate the proposals. The evaluation report was subjected to the scrutiny of the Joint Transaction Committee and the Joint Technical Transaction Committee before approval by the NCP/NDPHCN Board meeting.

The joint NCP/NDPHC board approved that 42 out of the 66 be prequalified to move to the financial bid opening stage.

 

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