FG to sell 100% stake in three power plants •Auctions 51% in Geregu

October 2, 2012 by Martin Ayankola  

 

Chairman, Technical Committee, National Council on Privatisation, Mr. Atedo Peterside
| credits: atedopeterside.com

Two of the thermal power stations, whose financial bids were opened last week, Ughelli and Sapele, will be sold outright to investors.

The deal for the Afam plant will be concluded later but it will be sold outright too.

Our correspondent gathered on Monday that the Federal Government had reviewed its position of selling 51 per cent of its stake in those companies and had decided to sell them wholly to investors.

“What the investors bid for, from which the winning bids were picked, was 100 per cent stake in Ughelli, Afam and Delta power stations, it is only in Geregu that the government is selling 51 per cent of its stake,” a top source in the Bureau of Public Enterprises, who asked not to be named, told our correspondent on Monday.

“The government is selling its entire stake in the three power firms because the firms are not in good shape. Holding some percentage of the stake in the firms would have meant that the government would have to be contributing towards their revamp, that is why the government has chosen to sell its entire stake in the three plants,” the source added.

On why the government opted for a concession arrangement for the hydro power plants in Kainji and Shiroro, our correspondent learnt that it was because it could not sell outright its water resource to investors.

Last Tuesday, five companies won bids for the five power firms offered for sale by the Federal Government.

The bid winners are Transnational Corporation of Nigeria Plc, Amperion Consortium, CMEC/Eurafric Energy Consortium, Mainstream Energy Solutions Limited and North-South Power Company Limited.

At the financial bids’ opening conducted in Abuja by the National Council on Privatisation, Transcorp emerged the preferred bidder for the Ughelli thermal power plant with an offer of $300m to beat its closest rival, Amperion, which offered $252m. The winning bid is for 100 per cent stake.

Amperion Consortium, however, won the bid for 51 per cent stake in the Geregu power plant by matching the reserve bid price of $132m for the 414 megawatts plant.

The consortium is made up of Israeli-based BSG Resource Limited, State Grid Corporation of China and Forte Oil Plc, in which billionaire businessman, Mr. Femi Otedola, is the major stakeholder.

For the Sapele thermal power plant, CMEC/Eurafric Energy Consortium emerged the preferred bidder with an offer of $201m. The winning bid was for 100 per cent stake in the plant.

Mainstream Energy Solutions Limited, which was the sole bidder for the Kainji hydro plant, was designated the preferred bidder since its offer of $50.76m met the reserved fixed annual fee.

However, the plant will not be sold outright but will be given out on a 15-year concession with the bid winner paying a commencement fee of $257m before the deal can be sealed.

Similarly, North-South Power Company Limited emerged the preferred bidder for the Shiroro hydro power plant with a sole bid of $23.6m annually for a 15-year concession. The company will, however, pay a commencement fee of $111.65m to close the deal.

However, the bid for the Afam power plant was not opened, as all the three bidders failed to meet the stipulated guidelines, according to the Chairman, Technical Committee, NCP, Mr. Atedo Peterside, who supervised the opening of the bids.

But whenever Afam is sold, the government is selling its entire stake in the plant.

Speaking at the conclusion of the financial bids opening, Peterside said the segments of the electricity sector were interwoven, adding that the results achieved were determined by the weakest link in the complex and interdependent chain.

SOURCE: The Punch - Nigeria's Most Widely Read Newspaper  2 October 2012/