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Sale of 10 power plants stalled

By on February 25, 2015

Twelve months after the financial bids for 10 power plants constructed under the National Integrated Power Project were opened, the sale process remains inconclusive.

Investigation by our correspondent showed that the Federal Government had yet to resolve the challenge of gas supply to the power plants, some of which are located far away from the nation’s gas supply base.

The Acting Head of Public Communications, Bureau of Public Enterprises, Mr. Alex Okoh, confirmed this in a telephone interview with our correspondent in Abuja on Monday.

“Government is working hard to resolve the gas issue,” Okoh said.

The BPE has not been able to sign the Share Purchase Agreements with the prospective core investors as a result of the inability to secure gas supply agreements for the plants.

Our correspondent also learnt that the absence of a gas supply agreement was also affecting the conclusion of the sale of one of the successor companies of the defunct Power Holding Company of Nigeria, the Afam Power Plant.

After the financial bid opening in March last year, core investors emerged for the 10 power plants but the National Council on Privatisation approved the bids for seven of the power plants, while three were left pending until the resolution of some legal issues.

It was learnt that without securing gas supply, the prospective core investors would not be able to muster the financial resources to pay for the power plants.

Without gas supply, the plants are not bankable; it was gathered that the banks were not willing to lend money to an investor that was not sure of gas supply for the next two years.

It is expected that when the core investors pay for the power plants, they should start producing and selling power, but without gas supply, they cannot do this.

The 10 gas-fired power plants are expected to add 4,311 Megawatts of electricity to the nation’s fledgling electricity supply industry.

The plants include Geregu II (434 MW); Calabar (630MW); Egbema (378MW), and Ihovbor (504MW).

Others are Gbarain (252MW); Sapele (504MW); Omoku (252MW); Alaoji (107MW); Olorunsogo (750MW); and Omotosho (500MW).

The National Economic Council had in 2004 approved the funding of the NIPP projects from the Excess Crude Oil Account, which belongs to the three tiers of government.

The Niger Delta Power Holding Company Limited was also approved as the special purpose vehicle for the projects, with the federal, state and local governments having shares in the company.

The projects suffered a setback when the Revenue Mobilisation, Allocation and Fiscal Commission sued the Federal Government for using funds in the ECA for the project. The matter was eventually settled out of court.

The NCP and the Governing Board of the NDPHCN had at their third joint meeting in March 2014 approved the opening of the financial bids by 42 prequalified bidders.

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

 

[Punch]