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FG shifts payment deadline for 10 NIPPs again

By BusinessNews Staff on March 17, 2015

In an apparent sign that the privatisation of the 10 power stations built under the National Integrated Power Plants (NIPPs) is in jeopardy, the National Council on Privatisation (NCP), through the Niger Delta Power Holding Company (NDPHC), has for the second time extended the deadline for the completion of the sale of the power assets to January 2016.

The extension was granted in line with the decisions reached at the NCP and Joint Technical Committee (JTC) meeting for the privatisation of the 10 NIPPs.

Accordingly, NDPHC 10 days ago wrote to the preferred bidders of the power plants informing them of the decision to extend the bank guarantees they had submitted to January 2016.

Indicating that the request was optional for their consideration and without penalties if they failed to take up the offer of extension, NDPHC however stated in the letter that the rejection of the extension would mean that the preferred bidder had forfeited his status as preferred bidder, thus giving room for negotiations with the reserve bidder.

NDPHC’s letter conveying the new development, which was sighted by THISDAY, among other issues, stated that the extension of the bank guarantees originally from July 2015 to August 2015 and now January 2016, was informed by requests made by some of the preferred bidders for a longer extension of the bank guarantees.

The letter, a source conversant with the NIPP privatisation process said, conveyed clearly the shift in the privatisation timelines, taking into consideration the fact that some of the power plants were yet to be completed.
Apart from delays in the completion of some of the power plants, the challenge of getting sustainable gas supplies to some of the already commissioned plants is still an issue that the preferred bidders are concerned about.

One of the preferred bidders, who did not want to be named, added that in addition to these challenges, the investors would have to incur interest charges from their banks on the monies borrowed to fund their acquisition of the assets if they lacked gas to power them.

This, he explained, coupled with the impact of the devaluation of the naira, since the transactions are dollar denominated, had impacted their ability to meet the payment deadline.

However, in response to THISDAY’s enquiries, the General Manager, Public Communication of NDPHC, Yakubu Lawal, said the exercise would go on as planned and without any undue hindrances.

But a source on the JTC explained to THISDAY that the preferred bidders of the plants might not be willing to go ahead with the exercise if the issues of gas supply is not squarely addressed by the NDPHC which it was learnt is making frantic efforts to connect gas sources to all the completed plants before commissioning and final sale.

NDPHC, it was also understood, is already negotiating gas supply contracts with private oil and gas firms.

The source said one of such gas supply agreements was recently signed with Gigagas for supply to the Omotosho power plant.

However, work at the Omoku, Egbema and Alaoji power plants has been extremely slow and has exceeded their completion timelines.
Through the privatisation of the NIPPs, the government hopes to rake in $5.814 billion.

The plants being sold are the 434MW Geregu II plant; 630MW Calabar plant; 378MW Egbema plant; 504MW Ihorvbor plant; 252MW Gbarain plant; 504MW Ogorode plant; 252MW Omoku plant; 1,076MW Alaoji plant; 750MW Olorunsogo plant; and the 500MW Omotosho plant.

Seoul Electric Power emerged the preferred bidder for Geregu II with a bid of $613,111,113, while YellowStone Electric Power emerged reserve bidder with a bid of $613,111,113.

Similarly, Ihorvbor had EMA Consortium and Index Consortium emerging as preferred and reserve bidders, having bid $580 million and $575 million respectively.

EMA Consortium and Nebula Power Generation Consortium emerged preferred and reserve bidders for Calabar, with bids of $625 million and $623 million respectively, while Dozzy Integrated Power Ltd emerged preferred bidder for Egbema with a bid of $415,075,000. AITEO emerged reserve bidder for the same plant having bid $392 million.

Gbarian had KDI Energy Resources as preferred bidder with a bid of $340 million and Azikel Power Ltd as reserve bidder with a bid of $305,090,665, while Daniel Power was preferred bidder for Ogorode with a bid of $531,777,777 and ESOP as reserve bidder with a bid of $510 million.
Shynobe International Ltd emerged preferred bidder for Omoku with $318,710,840, and AITEO Consortium as reserve bidder with a bid of $312,500,000, while AITEO, the sole bidder for Alaoji, emerged preferred bidder with a revised bid of $902 million after its initial bid of $680 million was said to have been below the reserve price.

ENL Consortium and Index Consortium emerged preferred and reserve bidders for Olorunsogo after bidding $751,240,000 and $730 million respectively, while Omotosho Electric power emerged the preferred bidder for Omotosho plant after bidding $659,999,000 and ENL as reserve bidder with a bid of $645,156,220.

[ThisDay]

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