A Review of the Nigerian Energy Industry

Nigeria: 2013: A year of privatised power sector

Power transmission line02 January 2013, Abuja – The biggest event that changed the course of the power sector in 2013 was the power assets privatisation culminating in the colourful handover of 10 distribution companies and four generation companies on November 1, 2013.

The power utilities acquired by various investors with foreign and local partners were part of the 18 core electricity assets grouped into Distribution companies (Discos) and Generation companies (Gencos) of the Power Holding Company of Nigeria (PHCN). Experts have considered the exercise as the significant event of the privatization ever done by any African government.

In 2012, privatisation efforts in Nigeria was heightened with the arrival of Prof. Chinedu Nebo as the Minister of Power in 2013

The major turnaround came in the first quarter, on March 21, when preferred bidders who were earlier declared winners of the bids made a 25percent advanced payment of about N73billion ($469.032million) to the Bureau of Public Enterprise (BPE). Following the success recorded in payment earlier, President Jonathan in May handed over the 25percent share certificates to the preferred bidders for Geregu, Sapele, Ughelli, Shiroro, Kainji Gencos. The Discos, including Benin, Enugu, Kano, Ibadan, Yola and Abuja, Ikeja, Jos, Eko, Port Harcourt also received the certificates having paid the 25percent.

Equally, Manitoba Hydro International (MHI) of Canada was formally was handed a Delegated Authority schedule which transferred managerial control of the Transmission Company of Nigeria (TCN) with the objective of repositioning the transmission system, the only asset to be left in government’s possession.

While the privatisation process was ongoing, the Federal Government in May began the 735megawatts Zungeru Hydro project which is expected to be completed in four years from time. At the ceremony in Zungeru, Niger State, President Jonathan noted that work on the largest hydro dam, the Mambilla Hydro in Taraba State that was abandoned for many years, would be commenced shortly.

Meanwhile, Nigerian Electricity Regulatory Commission (NERC) , has implemented the Multi Year Tariff Order (MYTO 2) in June which came under pressure from the consumers as it increased electricity bills even in the face of serious system collapses recorded across many states like Bayelsa, Kebbi, Gombe among others. The committee set up by the Minister of Power, Prof. Chinedu Nebo attributed the collapse to weakened systems, inadequate and aged personnel, and environmental factors such as trees falling on transmission lines and towers.

The preferred bidders received heavy pressure in August, following a deadline issued by the Bureau of Public Enterprise (BPE), handling the privatization exercise to pay up the 75percent balance of about $3 billion (N480 billion) before they could take over the plants. While many struggled to complete the payment before the August 21st deadline, one of the bidders, Interstate Electrics, had a major challenges that lasted for a month before it was finally cleared.

Meanwhile, the handover of the power utilities was officially done early in October by President Goodluck Jonathan amidst strikes and kicks from the National Union of Electricity Employees (NUEE) over unpaid severance benefits to the workers. This was, however, tackled with the signing of an agreement in late October to pay all such benefits and other claims of the workers before the end of November.

Finally, on November 1st, the privatized assets consisting of 10 Distribution companies (Discos) and four Generation companies (Gencos) were handed over to the new owners in a coordinated exercise. The Abuja Disco was handed over to KANN Consortium by the Minister of Power, Prof. Chinedu Nebo on behalf of the Chairman, National Council on Privatisation (NCP), Vice President Namadi Sambo. Sambo noted during the event that in post privatization, the ministry will move to policy planning and monitoring of the private-led power sector.

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