A Review of the Nigerian Energy Industry

Enugu Disco Sale – Has the dust finally settled?

Atedo Peterside24 September 2013, Abuja – The National Council on Privatisation (NCP), chaired by Vice President Namadi Sambo at a meeting on Friday, 20th September 2013 finally approved the payment of the remaining 75% of 14 out of the 15 bidders for the acquisition of the 15 PHCN successor companies.

By extension, the Council approved the late payment by Interstate Electric Limited for Enugu Distribution Company Plc (Enugu Disco).

This announcement puts to rest speculations and uncertainties surrounding the sale of Enugu Disco to Interstate Electrics Limited. None of the 15 privatised power companies’ sales raised as much dust as did the Enugu Disco.

The controversy that dogged the sale of Enugu Disco to Interstate Electrics started after the August 21 deadline for the 75 percent tranche payment by preferred bidders for the 15 unbundled PHCN successor companies. The BPE had kept mute several days after the deadline, refusing to confirm which firms had paid and which defaulted. Consequently, the rumour mill went agog with claims and counter claims that questioned the credibility of the entire process.

However, the Minister of Power, Prof. Chinedu Nebo, broke the ice when he announced officially that all but one failed to make further payments after the August 21 deadline. Interstate Electrics floated by multi-billionaire businessman Emeka Offor, preferred bidder for the Enugu Disco, it was later claimed, couldn’t beat the deadline.

It was reported in diverse quarters that the BPE conveyed rejection and subsequent disqualification in two letters dated August 21st and 22nd respectively and addressed to the Managing Director of Interstate contrary to claims made by the firm that it got 20 days grace from the agency to pay the 75 percent balance of the $126m reserved price for the power firm. On October 17, 2012, documents obtained from the BPE showed that Interstate did poorly in the technical and commercial tests conducted by the BPE. It is instructive that the document stated unequivocally that Interstate had to be disqualified for failing ‘consistency tests.’

It was equally reported last week, prior to the eventual confirmation of the sale to Interstate, that the Technical Committee of the NCP had met in Abuja and resolved by a vote of ten members to one not to hand over the Disco to Interstate Electrics for failing to meet the initial payment deadline of August 21.

The reason for the rejection according to a source close to the NCP was that Enugu Disco is too crucial to be left in the hands of a company that had to take advantage of an extra 21day window before it could make payment, expressing doubts over the technical expertise of the company to run the Disco. Another source close to the technical committee of the NCP prior to the Friday NCP meeting also held strongly that 10 out of the 11 members of the committee voted against handing over the Disco to the company.

However, prior to those meetings there had been intense lobbying within government circles for the Disco to be handed to Interstate amid speculations and rumours that Interstate’s promoter, Offor, had the backing of powers within Aso Rock.

Amidst the ensuing stage show, the reserve bidder, Eastern Electric proceeded to the Federal High Court in Abuja asking it to compel BPE to invite the consortium to pay for Enugu Disco following the acclaimed default of Interstate Electrics. Its Communications Consultant, Mr. Don C. Adinuba in a statement said, “The Bureau of Public Enterprises is still holding on to our $10 million bank bond raised when we were bidding for the Enugu Disco.”

Perhaps in a show of solidarity and sympathy, the National Publicity Secretary of Conference of Nigerian Political Parties (CNPP), Osita Okechukwu, cried foul over the choice of Interstate Electric. He said, “One is at a loss how a company that failed woefully to pass the initial assessment which is Consistency Test, got Negative Net Present Value (NPV) and to worsen matter failed to pay before the deadline, could be handed over the lifeline of enterprising and hard working Nigeria.” Okechukwu said Interstate Electric did not pay the outstanding payment of 75 per cent of the purchase consideration for Enugu Disco by August 21, 2013, which disqualifies it.

With so many waters going down the bridge and the pendulum eventually swinging to the side of Interstate Electrics, several questions remain begging for answers. Why is it that Interstate which was declared to have terrible technical ratings and did not make its payments within the stipulated deadline, was finally favoured among more technically qualified competitors? Has the Bureau for Public Enterprises (BPE), the agency charged with the privatization of state-owned enterprises, bent the rules and engaged in a pattern of preferential treatment towards Interstate? Why did it take this long to ratify Interstate’s payment, and what becomes of the reversed bidders threat of approaching the court to seek redress? Only time can tell.

Speaking to Daily Trust on phone yesterday on recent developments, Communications Officer for Interstate Electric, Val Oji, said the company would not make official comments or release any statement until October 1, after the proper handover. However, it may not yet be uhuru for Interstate. Communications Consultant to Eastern Electrics, Mr. Don C. Adinuba told Daily Trust yesterday he would not say much on the issue since it is in court. He said: “this is subjudice, it is in court, we expected the NCP to respect the fact that the case is in court.” He reiterated the company’s earlier position that Instate couldn’t beat the payment deadline, insisting that official documents available from the NCP and BPE showed there was no extension of payment from the BPE and that Interstate failed the competency test.

What now lies before the NCP is to finalise arrangements for the formal handing over of the power plants to the preferred bidders who completed payment before the expiration of the August 21 deadline so Nigerians will begin to either witness the much-taunted power boom or perhaps be confined to everlasting power doom.

– Daily Trust

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