18 October 2012

Nigeria: FG Asked to Ensure Disco Bids Match Bidders Business Plans

The Federal Government and the Bureau of Public Enterprises (BPE) have been called upon to ensure that the bids submitted by the six firms that won the bids to operate the 10 electricity distribution companies (Discos) across the country are consistent with the business plans submitted by bidders.

Also, Governor Peter Obi of Anambra State has expressed shock that Eastern Electric Nigeria Limited (EENL), a consortium backed by the four South-eastern states, except Imo; oil and gas service provider, Nestoil; and Geometric Power Limited, a company owned by the former Minister of Power, Prof. Bart Nnaji, did not emerge as the choice bidder at the commercial bid opening for the discos, which held in Abuja on Tuesday.

Obi, who is also the Chairman of South-east Governors' Forum is believed to have championed the floating of EENL, one of the consortiums that submitted bids for the Enugu Distribution Company.

Interstate Electrics Limited, which is fronted by Emeka Offor, emerged the preferred bidders for both the Enugu and Abuja Discos.

But commenting on the exercise in a telephone chat with THISDAY, the governor argued that no other company or individual would have been in a better position to run the power company better than the governors in whose domain the power company is located.

Obi said although he was not in position to comment on the transparency or otherwise of exercise, since he was not following the process, but insisted that the power asset would have been better managed by those who understand the terrain.

He however noted that if at the end of the day, the exercise was adjudged transparent, the result would be accepted by all.

"Why it is shocking to me is because the South-east governors came together to bid for the power company, because it will offer us opportunity to provide adequate electricity to our people.

"Ordinarily, one would have expected we would have been choice bidders. We are surprise that we lost. Look at the South-south governors, they got their own and it will be easier for them to provide their people power," Obi said.

But the Association of Bidders of Discos, in a statement signed by its secretary, Charles Udeka, urged that the bids submitted by the firms that won must be feasible so that investors and lenders would be able to commit their capital to the discos with confidence.

The association noted that any credible bidder should be pleased to present its plans on how it intends to achieve the promise made in their loss proposals.

This, it said, is very important, given that what "Nigerians want is available power on a consistent basis, not unachievable plans designed only to win competitive bids that result in no change".

Udeka also wants the Nigerian Electricity Regulatory Commission (NERC) to discharge its statutory duties by ensuring that the distribution companies are financeable and financially stable on a sustainable basis.

"The Federal Government should ensure that the next step in the process is that the BPE will check that the bids which were opened yesterday are consistent with business plans submitted by bidders.

"They must be feasible so that investors and lenders will be able to commit their capital to the discos with confidence.

"Nigerians would not be happy if poorly performing publicly owned utilities become poorly managed privately owned companies. Neither will it be desirable that a few years down the line these successor private sector companies run into financial bad weather or need to fleece power consumers through higher charge-out rates beyond the Multi Year Tariff Order", the association said.

Six firms won the bids to operate the 10 discos created from the unbundling of the Power Holding Company of Nigeria (PHCN) under the privatiation programme.

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