20 February 2013

Nigeria: Power Sector - New Owners to Take Possession of Assets June 2013

Lagos — The newly preferred bidders in the Federal Government's privatised power sector are expected to take possession of assets by June, 2013.

A member, National Council on Privatization, NCP, and Chairman, NCP's Technical Committee, Mr. Atedo Peterside revealed this yesterday at 2013 Standard Bank West Africa Investor Conference, saying, "we expect new owners to take possession of these power sector assets in mid-2013 and also expect significant investment upgrades to follow suit."

While welcoming both local and foreign investors, Peterside said the country has achieved remarkable progress in agriculture, banking, power, capital market and ports activities within one year period.

In his words, "with respect to the power sector, we now have preferred private sector bidders for 10 out of the 11 distribution companies and 4 out of the 5 generation companies that were slated for privatization. We also have a contract in place for the private sector management of Nigeria's transmission network by a world class operator (Manitoba Hydro International of Canada), a set of milestones that have never been attained before in the history of power sector reform in this country."

Continuing, he said, "within the agricultural sector, we have seen greater effectiveness in the dissemination of fertilizer to farmers within Nigeria as the Federal Government is no longer a part of the procurement and distribution process.

Farmers typically received only 11 percent of the fertilizer that was procured under the previous regime at the subsidized price and this is now steadily rising.

Government reforms have now cut out the middle man and farmers are able to receive subsidy vouchers directly through their mobile phones.

In addition, ongoing efforts to share risk within the sector has resulted in increased levels of credit flowing through to agriculture. The banking sector now extends 3.5% of total lending to agriculture, up from around 1.5% in 2010, with a target of 10% of total lending by 2017."

Speaking at the forum, Director General of SEC, Ms Arunma Oteh, represented by Mr. Edosa Aigbekaen, Legal and Enforcement unit of the commission, said the commission has strengthened its regulation and surveillance of the market to ensure that operators and all stakeholders abide by the rules to enhance confidence.

The Director General stated that confidence has returned to the market and that the commission will consolidate its rules to make the market transparent and in compliance with global standard. According to her, "We have also strengthened the corporate governance practice by coming out with code that operator and stakeholders are expected to follow with moral suasion. We hope that all these and more will further help to boost confidence in the market."

In his own remark, the Chief Operating Officer, Nigerian Stock Exchange, (NSE), Mr. Oscar Onyema, said, The Exchange is going to concentrate on developing and deepening the already existing products - equities, bonds and Exchange Traded Funds, ETF.

We are committed to the achievement of the five products in five years target by 2015, with the introduction of Options and Futures to complement the other three asset classes. This is among key initiatives targeted at driving the growth and development of the capital market in the current year. The $I trillion market capitalisaion target is achievable if key sectors of the economy like utility, oil and gas, agriculture etc are represented at the Exchange.

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