Leadership (Abuja)

Nigeria: Power Distribution Firms - Oando, Honeywell May Emerge Owners

The Bureau for Public Enterprises (BPE) will today announce the preferred bidders for the nation's 10 power distribution companies. There are strong indications that BPE is joggling between the choice of picking companies with the capacity for technical loss reduction (TLR) and the financial strength of the bidding companies. According to the BPE, 21 companies were approved for the financial bid of 11 distribution companies nationwide. A breakdown showed that Ikeja Distribution Company had received the highest number of qualified bids with eight firms.

They are: Oando Consortium, Amperion Power Distribution Company Ltd, Honeywell Energy Resources Limited and Integrated Energy Distribution and Marketing Company. Others are Vigeo Holdings, Gumco, African Corporation AFC and CESC, Kepco/NEDC Consortium, West Power and Gas and Rockson Engineering.

The Eko Distribution Company received the second highest number of bids, with six firms showing interest. The bidders are Oando Consortium, Integrated Energy Distribution and Marketing Company,

Sepco-Pacific Energy Consortium, Kepco/NEDC Consortium, Honeywell Energy Resources, Limited West Power and Gas as well as Rockson Engineering.

For Ikeja and Eko Discos, which many industry watchers described as the juiciest among the other distribution companies, there will be a battle between Oando Consortium and Honeywell Energy Resources. The Oando Consortium is said to be promoted by the Tinubu families in consortium with Tata of India while Oba Otudeko is being backed by the Arisekolas among others under Honeywell Energy Resources. LEADERSHIP gathered there is the likelihood that Tinubu will spin the EKO Disco while Oba Otudeko may corner Ikeja Disco.

Oando and Tata of India said that they have set aside a whopping sum of N135 billion ($900 million) to buy up three power DISCOs billed for final privatization today by the BPE. The three power companies are Eko, Ikeja and Benin Discos.

According to the senior general manager of Tata Power Delhi Distribution (TPDDL) of India, Mr. Vivek Singla, the bid for the three

Discos is being done in two separate consortiums of two leading Nigerian companies which include Oando and Viego Holdens. 'Both consortiums have qualified for all three Discos. The total investment is about $900 million," Singla said.

But a source close to BPE said the government is not only considering the financial strength of the bidding companies but more importantly the ability of the bidding company to have the capacity to achieve the highest technical loss reduction (TLR) over a short period of time.

Industry experts said that Oando consortium is not also helped by the recent power crisis in India where Tata is a major stakeholder managing one of India's distribution companies which is enveloped in the power outages in that country.

When asked how TPDDL is going to raise such amount given the cash crunch the company is facing back in India, the TPDDL boss said that the fund would arrange through equity in order to meet its own obligation in the consortium.

For Honeywell Energy Resources Limited, experts argued that the promoters' closeness to government might be an advantage. However, they maintained that Rockson Engineering is also highly favoured to spin one of Ikeja, Benin and also Port Harcourt Discos.

Integrated Electric Nigeria Limited, promoted by retired General Abubakar as chairman, Mr. Tunde Ayeni and Dr. Shola Ayandele, is contesting with other bidders for Eko, Ibadan and Yola distribution companies. Experts said that Integrated Electric is likely to spin Ibadan Disco given its financial strength and its technical expertise.

Meanwhile Emeka Offor's Interstate Electric Nigeria Limited is said to be slugging it out with several other bidders, which include Eastern Electric Nigeria Limited for Enugu Distribution Company.

Ads by Google

Copyright © 2012 Leadership. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.