A Review of the Nigerian Energy Industry

BPE steps up PHCN privatisation process

5 September 2011, Sweetcrude, Abuja – The Bureau of Public Enterprises (BPE) have stepped up efforts at the sale of the Power Holding Company of Nigeria (PHCN).

It sent, at the weekend, Requests for Proposals (RFPs) and Information Memoranda (IM) to prospective investors of successor companies created from the unbundling of PHCN, while the draft concession agreements and draft Share Purchase Agreements (SPA) is expected to be sent to them this week.
A request for proposal is issued at an early stage in a procurement process, where an invitation is presented for suppliers, often through a bidding process, to submit a proposal on a specific commodity or service. The RFP process brings structure to the procurement decision and is meant to allow the risks and benefits to be identified clearly upfront.

A statement from BPE, signed by its spokesperson, Chukwuma Nwokoh, said the RFP and IM were sent on Friday to prospective investors.

BPE had two weeks ago released two industry agreements—the draft Power Purchase Agreement (PPA) and the draft Vesting Contract.

According to the BPE, the PPA is intended to be executed between power generators and the power off-taker. “For now, the off-taker is the Nigeria Bulk Electricity Trading (NEBT) Plc, also known as the Bulk Trader”, the statement said.

It added: “The vesting contract is expected to be executed between the bulk trader and the power distribution companies. It is a mechanism that is used during the transition period in the electricity industry reform to ensure that the available power is shared equitably among the distribution companies.

“The core investor sale strategy will be employed in the privatisation of the 11 electricity distribution companies and four thermal plants in the country. The privatisation of the three hydro power stations will also be carried out through concession strategy.

“Potential bidders should be existing power distribution companies or core investor groups with power distribution companies as long-term technical partners. Successful bidders will be responsible for operating the distribution companies, making the necessary investments to improve the distribution network and customer service in line with the objectives of the Federal Government of Nigeria as set out in the National Electric Power Policy (NEPP).”

The statement explained that as for the generating companies, potential bidders/concessionaires, who should be existing local and/or international power generators or investors with power generators as long-term technical partners, will be responsible for operating the stations, improving the generation capacity and making the necessary investments in line with the objectives of the Federal Government of Nigeria as set out in the NEPP.

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