13 November 2012

Nigeria: PHCN Is Technically Defunct - Ministry

The Power Holding Company of Nigeria (PHCN) has ceased to exist as provided by the power sector reform roadmap, Power Ministry spokesman Greyne Anosike has said.

Anosike stated this yesterday in reaction to a statement by the House of Representatives Committee on Power criticising zero allocation to the PHCN.

The committee chair, Rep. Patrick Ikhariale (PDP, Edo) yesterday faulted the zero budgetary allocation to the PHCN in the 2013 budget estimates.

Ikhariale told newsmen in Abuja that the decision could cause a "stopgap" in the provision of electricity next year in addition to discouraging investors in the ongoing privatisation of the 18 successor companies of the PHCN.

But Anosike told Daily Trust in a telephone interview yesterday that "the power roadmap provided for the gradual phase out of PHCN.

"There is no PHCN anymore, technically. The zero budget allocation therefore means that whoever among the PHCN staff that refused to move to the generation and distribution companies they were posted to is on his own.

"Remember that earlier in the year, they were asked to move on transfer to DISCOs but some refused and are holding on to a non-existent PHCN. The Nigerian Electricity Regulatory Commission (NERC) is now in charge of the PHCN building as provided by the roadmap," Anosike said.

But Ikhariale argued that "The ongoing bidding process is not one that you can put a fixated time-frame on looking through the terms and agreement that has been reached. If within this period of six months the generation companies are left idle and unfunded in the 2013 budget, the logical implication is that Nigerians are being told systematically to be ready to buy more candles and lanterns than they have done in the past. It is absolutely imperative that we make the necessary allocations even though the sale process is going on, we must not allow a stopgap in the process.

"If there is a major breakdown in any of the generation and distribution companies as a result of lack of follow up because of no funding, we are going to have a situation that will lead to a floodgate of litigation from buyers. Many bidders may be tempted to pullout of whatever bid or financial agreement they may have entered into."

According to the terms and agreement provided by government sellers, within six months after signing of the Sale and Purchase Agreement or the Shareholders' Agreement, the bidder will be required to pay the outstanding 70% of the share purchase price to complete the transaction. After the completion of payment, the handover of the successor company to the preferred bidder will conclude the transaction.

The National Council on Privatisation (NCP) is in advance stage of the sale of power plants and distribution companies (discos).

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