Investors In Power Companies Pay 25% Of Offer Ahead Of Deadline

Three major preferred bidders of power distribution companies with a collective stake in the segment of over 60% have made their requisite payments to the Bureau of Public Enterprises (BPE) preparatory to their taking over the companies, causing a lot of excitement in the sector.

 

Investigations reveal that all the payments were made through local banks, a clear departure from the past when these payments were done through foreign banks. This provides comparative comfort for the bidders towards meeting the March 21, 2013 deadline.

 

Already, KEPCO/NEDC and West and Power Gas Consortium has paid for the Ikeja and Eko Distribution Companies respectively, while the preferred bidder for the Ibadan Distribution Zone, said to be the largest, will make payments today.

 

These payments signify that the expected rejuvenation of the power sector is underway, especially as they come way ahead of the deadline of March 21.

 

The National Council on Privatization (NCP) only last month approved the sale of four generating companies to their bidders. While the Geregu Power Plant was acquired by Amperion Consortium and for which 25% of the $600m offer money, amounting to $33m, including the local component of N519.12m has been paid; Egbin Power Plant in Lagos, which is the largest generating company in Nigeria with 1320MW was sold to KEPCO at $407.3m.

 

The duo of Olorunshogo and Omotosho power plants in Ogun and Ondo States respectively have been sold to the Chinese firms constructing them.

 

The payment by West Power and Gas of $33.75m for the Eko Power Distribution Company this week represents 25% of the $135m they offered for the Federal Government’s 60% stake in the company. It paid in two tranches, and is expected to pay the remaining 75% within six months.

 

The consortium comprises of Alpha Consortium Limited, Atlantic Meridian, Africa Infrastructure Investment Fund 2 Mauritius and Siemens Limited of Germany.

 

The NCP had in December 2010 advertised for Expressions of Interest (EoIs) from prospective core investors in acquiring controlling stakes in 11 successor distribution companies (DISCOs) carved out of the Power Holding Company of Nigeria (PHCN).

 

By the March 4, 2011 deadline for the submission of the EoIs, the Council had received 180 applications for the 11 DISCOs. 80 bidders were shortlisted after the evaluation of the bids, out of which 72 emerged at the deadline for the payment of the mandatory data room access fee of $20,000.

 

All the pre-qualified bidders were given access to the dataroom from September 1, 2011 to July 31, 2012 when they submitted their proposals. Pre-qualified bidders were also to visit the distribution companies and physical data rooms that were located within the franchise area of each distribution company.

 

By the bid submission deadline of July 31, 2012, the BPE had received 54 proposals from pre-qualified bidders. The received bids were opened and sorted on August 1, 2012, when all the bids were confirmed to be complete in terms of having both commercial and technical proposals.

 

Out of the 54 bids, 10 failed the first test of responsiveness and completeness. The remaining 44 bids were then subjected to full technical evaluation. Out of the 44 bids, 32 bids submitted by 20 bidders scored the minimum of 75 per cent to proceed to the next stage in the process.

 

The final approval of the preferred bidders by the NCP and its announcement by the successor companies was made on October 23, 2012 for the DISCOs.

 

The Nigerian electricity industry has been unbundled into generation and distribution companies with a single transmission company with a view to encouraging private sector participation, and attracting foreign and local investment to ensure economic and reliable electricity supply.

The Herald NG

The Herald NG is a leading newspaper in Nigeria at the forefront of the digital revolution.

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