January 17, 2018

Investors to pay N711bn for 3 NIPP power plants

Investors to pay N711bn for 3 NIPP power plants

ABUJA—THE Managing Director of Niger Delta Power Holding Company, Mr. Chiedo Ugbo, said yesterday that the Federal Government and preferred bidders had opened negotiation for payment arrangement of N711 billion ($1.975bn) for three power plants.

The power plants include the 560 megawatts (MW) Calabar Generation Company, GENCO; 513MW Omotosho GENCO; and 434MW Geregu GENCO in Kogi State.

Nuclear power plant

Ugbo, who disclosed this at an interactive session with newsmen in Abuja, explained that the sale of the 80 per cent shares in the GENCOs was delayed due to liquidity crisis and foreign exchange (forex) scarcity.

He said the transaction was delayed because after PHCN’s privatisation in 2013, the electricity market had liquidity crisis and foreign exchange (forex) issues, which challenged investors and lenders in the power sector.

Ugbo explained that the privatisation  of the 10 GENCOs under the National Integrated Power Projects, NIPP, was being done in phases.

It would be recalled that preferred bidders emerged for the 10 thermal plants in March 2014, seeking to own 80 per cent equities of $5.8 billion (about N2.09 trillion) in the plants, while government retains the 20 per cent equity.

The three operational GGENCOs are in the first phase: EMA Consortium won Calabar GENCO at $625m (N225.3bn), Omotosho Electric Power won Omotosho GENCO at $659.9m (N237.8bn), and Seoul Electric Power Ltd won that of Geregu GenCo at $690.2m (N248.7bn) totalling $1.975m (about N711.8bn).

According to Ugbo, the earlier agreement for the bidders to pay 25 per cent of the bid price and later pay the 75 per cent balance was what was being negotiated as bidders seek to pay lower than that, due to liquidity issues, but at the same price.

“We have negotiated the share sales agreement and we are negotiating what percentage the bidders should pay now and what they should pay later and when they should pay,” he said,

Ugbo said upon consideration by the NDPHC and the Bureau of Public Enterprise (BPE), the technical and financial committees of the privatisation would be consulted before advising Vice President Yemi Osinbajo for a decision to handover the plants to the investors.

On the statuses of the NIPP plants, Ugbo paid a glowing tribute to the administration of President Muhammadu Buhari, whom he said salvaged GENCOs from running into bankruptcy.

He said the N701 billion Payment Assurance Guarantee, PAG, of the federal government this year ensured it got about 80 per cent of its monthly invoice to pay for gas better than when it was getting only 30 per cent payment among other things.

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