Govt, investors parley on listing of power firms

Chinedu Nebo21 March 2014, Abuja – The Federal Government and investors in privatized power companies are discussing the possibilities of reducing the five-year holding period for the owners of the new power companies to about three years to enable them sell their shares to the investing public.

Minister of Power, Professor Chinedu Nebo, disclosed this yesterday during a courtesy visit to the Nigerian Stock Exchange (NSE). Nebo came to discuss ways that the capital market can support the realization of the objectives of the power reforms.

Nebo said the hindrance to the public sale and possible listing of shares of the privatized power generation companies (gencos) and distribution companies (discos) is a clause in the sale agreement which stipulates that the new owners must hold on to the companies for five years before they can sell the shares.

He said government, through the National Council on Privatisation (NCP) and the power companies are already reviewing the possibility of the downward review of the five-year timeline to about three years.

“I don’t see why five years was put in other than the government did not want people to strip these companies and then sell the scrap to the general public. Be that as it may, with the things that are afoot today, we are encouraging a dialogue between the successor companies, privatised from PHCN and government of Nigeria, especially the National Council on Privatisation, to see if these five years can be negotiated downward so that within the next two – and – a – half years, we will be able to see them go to the stock market because we believe that the most veritable way of getting the financing they need to expand their facilities and give much better services to our people will be by going to the stock market,” Nebo said.

According to him, the delay in approaching the capital market was both legal and operational as the Nigerian Stock Exchange also expects at least three years of due diligence, paperwork and submission of annual reports before a company is listed.

He said government was already the impediments in the power supply system, especially the issue of finance.

“Government is already addressing some of the issues, the major issue, actually, is financing for expansion and consolidation and that is where the stock market is very critical. Government has even organised a global financing summit that attracted more than 350 non-Nigerians, just about a month ago. So, government is working on that. Other constraints have to do with generating of more power because the more power you generate, the more power is sold, the more money is made by the generation companies, the transmission company and the distribution companies. So, we need to generate more power and the challenge there is the issue of gas. But government is working very hard to make sure that at the end of this year and the beginning of next year, there is a match – no longer a mismatch – in the availability of gas and the need of the generating companies,” Nebo said.

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