The transition brings to 16, the total number of power assets handed over to the private sector in the last four months.
Vice-President Namadi Sambo, who is also the Chairman of NCP noted at the handover ceremony that since the passage of Electric Power Sector Reform Act (EPSRA) 2005 and the unbundling of the defunct Power Holding Company of Nigeria (PHCN) into 18 successor companies, little was done to advance the reform of the sector until the coming into power of President Goodluck Jonathan which led to the enunciation of the Transformation Agenda of the nation’s economy.
The phase one of Olorunsogo Power Plant which has a capacity of 335 megawatts (MW) was constructed between 2002 and 2007 at the cost of $167,291,674.76.
The federal government funded 35 per cent of the cost, while the balance of 65 per cent was financed through vendor financing provided by SEPCO at an interest rate of 6 per cent per annum.
Meanwhile, Sambo, who was represented by the Director-General, Bureau of Public Enterprises (BPE), Mr. Benjamin Dikki, said the reform and privatisation programme would not have been possible without the leadership, support and commitment of President Jonathan and his team in the NCP; Presidential Taskforce on Power and Presidential Action Committee on Power to the implementation of the road map.
He noted that such capital injection and efficiency had been inadequate in PHCN over the years, resulting in gross inadequate power supply with the attendant negative effects on the citizenry and the economy at large, stressing that the provision of stable power remained imperative to drive the economic transformation of the country.
Sambo said:“It was the realisation that Nigeria will not attain the desired economic growth without adequate power that informed the power sector reform.”
He said the reform was a necessary tool for laying a solid foundation for sustainable power generation and service efficiency in the sector and the privatisation of the sector was a key component of the reform and a pre-condition for the start of a competitive electricity market in the country.
According to him, “The participation of the private sector would bring about higher generation capacities through the provision of more efficient and cost effective power stations and improvements in electric power distribution, in the areas of billing and collection, transmission networks” adding that “Nigeria will rise and shine brightly very, very soon.”
The plant was conceived initially in the contract and terms of the agreement that the power project, after completion, would operate commercially and the proceeds from the sales of electricity would be used for the repayment of the vendor financing and interest payment.
However, the delay in the completion period coupled with limitation in gas supply and paucity of funds at PHCN caused a default in the repayment plan. This debt was finally taken over by the Debt Management Office (DMO).
In 2010, however, President Jonathan approved that the BPE should proceed with the proposed divestiture of federal government shares in the plant, resulting in the Bureau commencing negotiations with SEPCO-Pacific to convert the project finance debt to equity and resolve the financial commitment of the federal government.
Chairman of SEPCO-Pacific, Dr. Adedeji Adeleke, described the Olorunsogo asset as SEPCO’s first venture outside China, noting however that it had since built over 10,000 megawatts of power in India, Iran and Saudi Arabia.
In a statement signed by BPE spokesman, Mr. Chigbo Anichebe, Adeleke also reiterated the belief of SEPCO-Pacific in the Nigerian economy.
Commending the entire transaction process, he said:“I have not met a crop of individuals that are as committed, as straight forward as BPE staff”.
He said it took the commitment and transparency exhibited by the BPE to arrive at the success recorded in the power reform and privatisation programme despite all the challenges encountered.