IntroductionThe much anticipated power sector reform aimed at repositioning its the critical sector to more transparent, efficient and cost-effective was thrown into disarray when preferred winners for 10 electricity distribution companies were announced by the Technical Committee on privatisation, last week. In 2010, President Goodluck Jonathan announced plans to break the Power Holding Company of Nigeria (PHCN) into 18 successor companies which include 11 distribution companies, six generation companies and one transmission company. He also set a target of 20000 megawatts by the year 2020.
How the preferred winners emerged
Many of the companies involved in the bids have little or no power sector experience. Several others were backed by powerful political interests but have technically capable partners. The distribution companies which are responsible for delivering electricity to end-users and collecting payment, were sold at a fixed price set by the Bureau of Private Enterprise (BPE). Therefore, bids were ranked on how efficiently the company promised to run the businesses.
The chairman, Technical Committee, National Council on Privatisation (NCP), Mr Atedo Peterside, stated that the ranking of the bidders would be based on the Aggregate Technical Commercial and Collection (ATC&C) loss reduction proposals submitted to the BPE along with technical proposals. Also, the amount to be paid by each distribution company had been determined by the Nigerian Electricity Regulatory Commission (NERC) and included in the Multi-Year Tariff Order that became effective on June 1, 2012.
He said the council would use a fit and proper examination to identify serious companies which not only want to make profit but want to provide services. “The use of this method for the selection of core investors for distribution companies is a clear departure from the NCP’s usual practice of awarding companies to the bidder who makes the highest financial offer to purchase an asset after being technically qualified,” he said.
“Furthermore, ATC & C loss levels will provide Nigerian consumers and other stakeholders with specific parameters with which to measure the outcome of the power sector reform and privatisation. Indeed, successful bidders are contractually bound to deliver on the ATC&C loss reduction levels they have submitted. Accordingly, the bidder offering the highest ATC & C loss reduction is in a leading position subject to the ground rules.
“The regulator will not adjust tariffs upwards to accommodate the inability of a Disco operator to deliver on the ATC & C levels that they commit to. Rather, tariffs will be adjusted downward annually to reflect the agreed ATC & C loss levels, irrespective of the operator’s ability to meet its contractual obligation,” he said.
Preferred bid winners: old wine in new bottles
Former Head of State, General Abdulsalami Abubakar’s company, Integrated Energy Distribution and Marketing Limited, with its technical partner, Philippines’ largest power retailer, Manila Electric, won four distribution companies which are Ibadan, Eko and Ikeja distribution companies with 17.46 per cent, 21.43 per cent and 22.51 per cent respectively. It also emerged as the sole bidder for the Yola distribution company with 18.58 per cent.
Interstate Electrics, owned by Emeka Offor, won the bid for Abuja Distribution Company with 21.62 per cent, while Gbolade Osibodu’s Vigeo Power Consortium won Benin Disco with 21.78 per cent.
Others on the winning side include Aura Energy Limited, which won Jos Disco; Sahelian Power SPV Limited won Kano Disco, while Port Harcourt Disco was won by Power Consortium with 19.55 per cent.
Action Congress of Nigeria (ACN) national leader, Senator Bola Ahmed Tinubu’s Oando Consortium and Oba Otudeko’s Honeywell Energy Resources, which bid for Eko Disco and Ikeja Disco lost to Integrated Energy Distribution and Marketing Limited in the two competitions.
FG retains 100% transmission
The Director-General of BPE, Bolanle Onagoruwa, noted that in transmission, “we have retained 100 per cent ownership of the Transmission Company of Nigeria but with a management contract in place that brings in Manitoba Hydro International as a management contractor who will be supervised by a capable Board of Directors from both the public and private sectors.
Stakeholders disagree on transparency of bidding process
Stakeholders have continued to express disappointment in the process of selecting preferred winners of the PHCN assets.
Archbishop Emeritus, Catholic Archdiocese of Lagos, His Eminence, Anthony Cardinal Okogie, faulted the BPE’s choice of preferred winners.
In a statement, Okogie said the outcome of exercise was unacceptable, saying it was another deliberate ploy by a few privileged individuals to continue to hold on to the collective wealth of the country to the detriment of the masses.
He said: “Nigerians have been taken for a ride for too long. The result of the exercise, to me, shows that government is not sincere about sanitising the power sector.
“How can the government allow firms of some individuals who are still under investigation by the Economic and Financial Crime Commission (EFCC) and other law enforcement agencies the liberty of administering such a sensitive area as our power sector reforms?
