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13 investors complete payment for power firms; Interstate, North-South miss deadline

By on August 23, 2013

The 13 consortia that beat the Wednesday’s deadline for the preferred bidders to pay the 75 per cent balance of the bid prices for the 15 successor companies of the Power Holding Company of Nigeria are set to take over the firms.

Sources at the Bureau of Public Enterprises, who spoke with one of our correspondents under the condition of anonymity on Wednesday, said 13 consortia succeeded in making payment for the remaining 75 per cent before the 5pm deadline.

The successful consortia are: West Power and Gas, the preferred bidder for the Eko Distribution Company; NEDC/KEPCO, Ikeja Distribution Company; 4Power Consortium, Port Harcourt Distribution Company; Vigeo Consortium, Benin Distribution Company; Aura Energy, Jos Distribution Company; and Kann Consortium, Abuja Distribution Company.

Others who met the payment deadline, according to the source, are: Integrated Energy Distribution and Marketing Company, the preferred bidder for both the Ibadan and Yola Distribution Companies; Sahelian Power, Kano Distribution Company; Transcorp/Woodrock Consortium, Ughelli Power Plc; Amperion, Geregu Power Plc; Mainstream Energy Limited, Kainji Power Plc; and CMEC/EUAFRIC Energy JV, which made part-payment for the acquisition of Sapele Power Plc.

However, two of the intending investors failed to pay the balance as scheduled.

They are: Interstate Electrics consortium, the preferred bidder for the Enugu Distribution Company, whose members include Chief Emeka Offor’s Chrome Energy, Power House International Limited and Metropolitan Electricity Authority of Thailand; and North-South Power Company, the preferred bidder for the Shiroro Power Plc.

The North-South consortium is made up of the Niger State Government, XS Energy Limited, BP Investment Limited, Urban Shelter Limited, Road Nigeria Plc, China International Water Electric and China Three Gorges Corporation.

Going by the rules guiding the privatisation process, the two firms have lost in their bid to acquire the power assets as the reserved bidders will now be given the opportunity to step up and acquire the companies upon the payment of the bid prices.

Indeed, one of the reserved bidders, Eastern Electric Company, said it was ready to take over the Enugu Electricity Distribution Company following the failure of Interstate to pay before the expiration of the deadline.

It said it was ready to pay $126m for the takeover of the company, which provides power to the south-eastern part of the country.

The failure of the two consortia to meet the payment deadline, experts said, confirmed the concerns that a number of the investors were finding it difficult to raise money from their lenders.

Both companies had met the March 21, 2013 deadline for the payment of the mandatory 25 per cent of the offer value of their bids by crediting the account of the Bureau of Public Enterprises with $31.5m and $27,913,633.50, respectively.

The BPE had received a total sum of $559,445,573.96 from all the preferred bidders as the 25 per cent of their respective bid prices.

Until recently, the failure to meet the deadline would have seen the forfeiture of the 25 per cent paid earlier. However, the Head, Public Communications, BPE, Mr. Chigbo Anichebe, told our correspondent said the rule had been reviewed.

He explained that the BPE would deduct the cost of transaction from the 25 per cent initial payment and return the balance to the defaulting preferred bidders.

Sources in the BPE said payments made by the preferred bidders had already been confirmed by the agency’s account department.

Our correspondents gathered that NEDC/KEPCO consortia paid $101m as the 75 per cent outstanding balance for the acquisition of the Ikeja Disco.

“We paid $96.75m today (Wednesday),” the Chairman, Vigeo Consortium, Chief Gbolade Osibodu, told one of our correspondents on telephone.

Similarly, the Chairman, West Power & Gas Limited, the preferred bidders for the Eko Disco, Mr. Charles Momoh, said the company had finalised the payment for the acquisition of a 60 per cent stake in Eko Disco ahead of the deadline.

He said the  balance payment of $101.25m was made two days ahead of the BPE deadline; adding that this followed the payment of the initial 25 per cent deposit of $33.75m earlier in March, bringing the total transaction value to $135m.

Momoh said, “To date, WPG has raised close to $500m in equity and debt financing to fund the acquisition of the Eko Disco and the significant rehabilitation and transformation work required to improve distribution network infrastructure and operations.

“Out of this, $250m has been allocated to rehabilitation, while the company has allocated a further $48m towards a power purchase agreement with the Nigerian Bulk Electricity Trading Plc.

“Today marks a tremendous milestone and a major step forward towards the completion of the most significant privatisation of government assets in Nigeria’s history. The success of the power transformation programme is critical to the future development of Nigeria.

“WPG, along with the other preferred bidders, fully appreciate the magnitude of the task before us and are honoured to have been selected. As a sector, we must work together to ensure we achieve the desired results.”

Eastern Electric Company, the reserve bidder for the Enugu Disco, said in a statement by its Communication Consultant, Mr. C. Don Adinuba, said it would not have difficulties raising the funds needed for it to take over the power firm.

The consortium was formed by the five South-East state governments; Nestoil, an indigenous operator in the upstream sector of the Nigerian petroleum industry; Aba Power Limited; Geometric Power Limited, led by the former Minister of Power, Prof. Bart Nnaji; and the founding Chairman of Diamond Bank Plc, Mr. Pascal Dozie.

Other members of the consortium are NRECA of the United States, which operates in Latin America, Pakistan, Sudan and Bangladesh, and controls 10 per cent of the US’ one million megawatt grid; and the NETGroup of South Africa, which operates the Tanzanian power system and maintains a significant presence in South Africa’s electricity business.

Adinuba said, “We have a robust and matchless combination of global best practices and the best experience of emerging economies. We shall not have difficulty raising the funds. The Bureau of Public Enterprises is still holding on to our $10m bank bond raised when we were bidding for the Enugu Disco.

“As all Nigerians must have known, the 141MW Aba integrated power project built by Geometric Power and which cost over $450m is about to be inaugurated.”

The Minister of Power, Prof Chinedu Nebo, had shortly after the Federal Executive Council meeting expressed the hope that the bidders would meet the deadline as many of them had responded positively as of Tuesday.

He said, “As many of you already are aware, today (Wednesday) is the last day for the payment of the 75 per cent of the remaining amounts of the money owned by the preferred bidders for the generating and distribution companies that have been privatised.

‘‘And I am very happy to announce to you that we are getting very positive results that many of these Gencos and Discos are living up to expectations.’’

 

 

 

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