20 February 2013

Nigeria: Power Privatisation - FG Signs Agreements With Bid Winners Tomorrow

To sustain investors' confidence in the transformation agenda of President Goodluck Jonathan, the Federal Government said it will sign most of the agreements with the bid winners of the Power Holding Company of Nigeria, PHCN successor companies tomorrow.

The contracts include those of the generation, Gencos and distribution, DISCos companies, which bank guarantees were recently verified by the Bureau of Public Enterprises, BPE, which handled the privatisation exercises.

The newly appointed Minister of Power, Prof. Chinedu Nebo, disclosed this on the sidelines of the on-going Nigerian Oil and Gas, NOG Conference, in Abuja on Wednesday.

He said: "Hopefully, by tomorrow (Thursday), most of the contracts will be signed in a very significant function. Most of the companies that won the bid to purchase the Gencos and Discos will be signed."

The minister also used the opportunity to reassure the investors that government would ensure that all the outstanding debts owed by its ministries, departments, and agencies, MDAs will bee settled before thee end of the mid-year.

He added, "We will also ensure that regulatory agencies, market operators, system operators and MDAs are consistently delivering on their respective mandate and to ensure that payment are being made as at when due.

"It has always been a problem that many of the government agencies are owing billions of Naira. This is not going to continue as the privatisation enters into conclusion," he stated.

The minister maintained that the current power reforms are being executed in line with the Power Sector Roadmap, which was launched by President Jonathan in August 2010, aimed at improving electricity supply to consumers.

Roadmap achievements

Given the objectives of the Roadmap, which he said is targeted at "removing obstacles to private sector investment and to ensure accelerated development of the Nigeria's electricity market," Nebo said significant progress had been made since the launch.

He identified some of these to include;

Removal of obstacles to private sector investment; Establishment of cost reflective tariff; Establishment and operationalisation of the Nigeria Bulk Electricity Trading Company; Provision of federal government credit enhancement to the Bulk Trader; Operationalising the Nigeria Electricity Liability Management Company of Nigeria, and Strengthen the licensing regime of the Nigerian Electricity Regulatory Commission, NERC; making sure that the commission is well equipped to act and ensure that the power sector reform is fully operationalised.

Up to 10,000MW generation by year end

In addition to these, the minister argued that the power sector had also witnessed what he described as "some substantial increase in the quantum of power delivery to consumers nationwide."

He attributed the increases to improvements in gas supply to the thermal stations, and increase in the water levels at the hydro stations.

Nebo added: "We have come a long way from less than 3,000 Mega watts, MW to over or near 4,200MW as at the moment. We have ensured that power supply is steadier and more predictable, and ensure that supply is two times the level it was in August 2012.

"By 2013, we would have the capacity by the end of December to generate anywhere between 8,000 to 10,000MW," while also hoping to attain 20,000MW by the Year 2020.

CBN report on power

However, latest economic report released by the Central Bank of Nigeria, CBN, revealed that rather than the improvement the minister spoke about, the country actually recorded a total loss of 620MW/hour of electricity in three months, between October and December 2012.

The losses were based on the differences in average electricity generated and average electricity consumed during the period.

According to the report, the country generated an average of 3,598.5MW/h of electricity in the fourth quarter, while only 2,978.5MW/h of electricity was consumed during the period.

The report noted that electricity generation appreciated by 7.2 per cent to 3,598.5MW/h from 3,358 MW/h generated in the third quarter of 2012.

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