A Review of the Nigerian Energy Industry

NIPP Privatisation: NDPHC seeks payment extension for 3 bidders

James olotu
James Olotu, NDPHC boss

17 April 2014, Abuja – The Niger Delta Power Holding Company Limited (NDPHC) may have written to its managing board to grant approval for the extension of the 15 per cent initial payment deadline for three preferred bidders of its power plants.

THISDAY gathered Wednesday in Abuja from sources that are well-informed with the processes in the National Integrated Power Projects (NIPPs) privatisation exercise that the preferred bidders that are allegedly going to benefit from the development are ENL Consortium Limited which emerged the preferred bidder for the 754 megawatts (MW) Olorunsogo plant with a bid price of $751.240 million, Seoul Electric Power Limited which put $690.200 million for 506MW-Geregu plant and Daniel Power Consortium which won its bid for 508MW-Ogorode power plant with a bid price of $531.777 million.

However, the NDPHC that through its Head of Public Affairs, Yakubu Lawal, denied such development, saying that nothing of such was in the offing and that it could not have done that without the approval of other agencies like the Bureau of Public Enterprises (BPE) which is part of the joint transaction committee.

The sources however explained that a letter seeking approval for a 10-day deadline extension for the firms was submitted by the NDPHC to Vice-President Namadi Sambo who heads the board of the company, shortly after it was discovered that the bidders had not made the mandatory payment at the expiration of the deadline.

It was also learnt that the reserve bidders for the plants; YellowStone Electric Limited, for Geregu with $613 million, ESOP Power Limited for Ogorode with $510 million and Index Consortium for Olorunsogo with $730 million are however getting ready to institute legal charges against parties to the transaction considering that it amounts to a violation of the privatisation rules.

“I can confirm to you that the NDPHC has written to the vice-president seeking approval for extension in payment deadline for three preferred bidders. The bidders are for Olorunsogo, Sapele and Geregu power plants.

“The letter was written shortly after the NDPHC discovered that payment for the initial 15 per cent bid bond did not hit their account as at the close of the established payment deadline for the transaction which was on Monday; that letter was sent by the legal department of the NDPHC to the vice-president seeking for a 10-day extension for the bidders,” one of the sources said.

Another who also spoke anonymously, stated that the reserve bidders for the plant were gathering their documents to file to the court for alleged breach of the privatisation rules by NDPHC and other parties involved.

Lawal however said in his response that: “The NDPHC has not extended payment deadline to any company. Also note that the privatisation exercise is a joint effort by NDPHC, BPE and any such decision, if any, will be taken by the joint board of NDPHC and NCP (National Council on Privatisation) headed by the VP. No company has been given any extension.”

The chairman of the Joint Transaction Technical Committee (JTTC), Governor Gabriel Suswam of Benue State had stated at an interview shortly after the financial bid opening for the plants some weeks ago that the process had been transparent from the onset and would continue to be until its concluded.

Suswan had also explained that the financial bids would be ratified in a matter of weeks by the board of the NIPP in conjunction with the JTTC, after which the preferred bidders would be invited to make their payments; he however did not give the time frame for the payment.
The JTTC was set up by the board of NIPP and NDPHC to consummate the privatisation of the plants. The NIPP is an integral part of government’s efforts to alleviate power shortages in the country and it was conceived in 2004 as a fast-track public sector funded initiative to add significant new generation capacity to Nigeria’s electricity supply system along with the electricity transmission, distribution and natural gas supply infrastructure required to deliver the additional capacity.

The government had also incorporated NDPHC in 2005 to serve as the legal vehicle to contract for, hold, manage and operate the assets developed and built under the NIPP using private sector best practices.

Meanwhile, the Nigerian Electricity Regulatory Commission (NERC) yesterday disclosed that it was now ready to sign into law the interim rules that would govern business proceedings in the Nigeria Electricity Supply Industry (NESI) following the conclusion of all consultations on the rules.

Chairman of NERC, Dr. Sam Amadi, stated in Abuja shortly after the April edition of the commission’s monthly meeting with chief executive officers (CEOs) of generation, distribution and transmission companies in NESI that it would sign the interim rule into law after the Easter holidays.

Amadi also announced the commission’s directives to all electricity distribution companies to immediately stop every acts of “reckless” billing of electricity consumers across the country.
“We have done consultations on the interim rules to increase the amount of liquidity in the system before the Transitional Electricity Market is declared. Yesterday (Tuesday), we had a final consultation on the interim rule and we have just announced to the CEOs that the interim rule will come into effect very soon probably after the holidays when the commission will need to sign the interim rule.

“The key thing about the interim rule is, it is raising the bar at threshold of remittance that the Discos should remit more money to the market to pay the Gencos and to pay for other services until we get to 100 per cent performance before hopefully TEM (Transition Electricity Market) is declared soonest,” Amadi said.

He further explained in connection with the interim rules that henceforth, electricity theft and vandalism of electricity assets will be handled with all the weights of the law, adding that the sector will no longer tolerate electricity theft and other associated crimes.
“There is rampant theft of electricity, and we have said that the discos should aggressively monitor and apprehend any customer who tampers with power, and anyone who steals energy at this crucial moment will face the full weight of criminal and civil sanctions.

“They will be arrested and prosecuted in a court of law. As a regulator, we will authorise the Discos to disconnect them and we will put very punitive sanctions so that to reconnect them, they will have to pay about 50 per cent more than they stole from the network. “We want to urge the citizens and consumers not to steal power. This damages the revenue of Discos and ultimately put the nation into more darkness,” Amadi added.

While accepting that the distribution companies were engaging in arbitrary billing of customers which must stop, Amadi explained that it was the responsibility of the distribution companies to provide customers with pre-paid meters.

He stressed that in the absence of meters, approved estimated billing methods must follow the guidelines provided by the commission.

He said: “NERC has underlined the importance of following the methodology of estimated billing. We have made it very clear that it is the responsibilities of the discos to meter the customers even though we have time gap to bridge the metering deficit but we want to see real action on that.”

“They have also indicated that they are continuing with the CAPMI (Credit Advance Payment for Meter Installation) but it is a stop-gap. We expect to see a robust metering plan but we have also insisted that in the interim before everybody is metered, the reckless estimation must stop immediately.

And that means three things; one, customers who have meters but not post paid meters, they have to go and read those meters, and for those who do not have any type of meter at all, NERC has provided a methodology that requires you to look at the amount of power you put on the feeder and that should be benched marked with those who have meters and you see how you do your estimation,” Amadi said.

He further noted that: “What is going on now really in some places is not estimation; it is arbitral because estimation is based on some formula. We have reiterated that they should go back to that methodology but ultimately the solution is fast tracking metering.”

On his part, the Managing Director of Abuja Electricity Distribution Company (AEDC), Neil Croucher, said the company was targeting the installation of 8,000 meters monthly in the next five years to bridge metering gap.

He however explained that the roll out would only commence after the company has streamlined its vending platform to ease the payment procedures for customers.
Croucher also lamented that the distribution companies were recording high losses due to energy theft and appealed to customers to avoid such acts as it was stunting the growth of the sector.


– Chineme Okafor, This Day

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