Lagos — Preferred bidders for the three electricity generation companies (GenCos) built by the Niger Delta Power Holding Company (NDPHC) under the National Integrated Power Projects (NIPPs) have proposed to the Federal Government cash payment of 30 per cent equity and 70 per cent debt equity as negotiation for the privatisation of the power plants continues.
According to the Managing Director of NDPHC, Mr. Chiedu Ugbo, the exercise was in continuation of the 2013 NIPP privatisation that saw to the successful bids for the 80 per cent equity in the 10 power plants at $5.736bn.
Although three power plants: Calabar, Omotosho and Geregu plants, were initially shortlisted for immediate privatisation, Daily Trust leant that two others, Egbema and Gberin plants, were subsequently included by the Federal Government.
Speaking in Lagos at the weekend, Ugbo said the company had begun negotiations with the three buyers based on the approval from the Vice President, Yemi Osinbajo, in February 2016 for phase privatisation of the power plant due to numerous issues which arose after the privatisation of old Power Holding Company of Nigeria (PHCN)'s assets.
The five bidders with their offers, EMA Consortium, as preferred bidder with a price of $625m for Calabar Generation Company, Dozzy Integrated Power with $415.7m offer for Egbema Generation Company, Seoul Electric Power Limited for Geregu Generation Company with a bid price of $690.2m, KDI Energy Resources for Gbarain Power plant with an offer of $340m and Omotoso plant with $659.9m by Omotosho Electric Power.
Ugbo said: "We are still negotiating with the buyers. The privatisation challenges such as liquidity problems, inadequate gas supply, as well as micro economic issues, had significant impact on the privatisation process since the emergence of the bidders on March 7, 2014. But we are negotiating with them," he said.
According to him, the next stage immediately after the emergence of the preffered bidders for the 10 plants would have been submission of their guarantee which, he said, they did at a time and commenced negotiation with them to finalise the payment structure, but that unfortunately, NDPHCN were yet to execute the agreement because of numerous issues that came up around 2015 and 2016.
"As soon as the new owners of old PHCH assets took over, market issues came up, coupled with micro economic challenge of between 2015 and 2016. We have been negotiation with the preferred bidders, the companies are still much interested, but unfortunately, the power sector market has not been able to attract lending now. The sector is not bankable at this time. What the preffered bidders are saying is that the privatisation was structured in such a way that they would fund 30 per cent equity and 70 per cent debt."
They said since the market is not good enough for them to borrow, they are ready to put down their 30 per cent equity and bring the 70 per cent when the market improves" Ugbo stated.
He said the proposal from the investors is yet to be presented to the presidency as negotiation is still on-going.
While bemoan the current state of electricity generation, distribution and transmission, Ugbo said NDPHC has spent over $3.5 billion on both distribution and transmission projects across the country.
"Even though there are available generation capacity close to 7,000MW, transmission company could only absorb about 68 per cent of what is generated. Currently we have between 2,900MW and 3,000MW generation capacity that is stranded while the installed capacity of the nation's power plants is 13,000MW."