Power Punch FG’s Proposed Sale of Five NIPPs by aisi August 30, 2022 written by aisi In a bid to improve power generation in the country, the Nigerian National Integrated Power Project (NIPP) was established in 2004. The programme was an intervention that aimed to improve government funding in the critically ailing electricity sector. However, 18 years past the project launch, there are contending conversations surrounding the Federal Government’s (FG’s) proposed sale of five NIPPs. Insufficient electricity supply has always been an issue in Nigeria, inhibiting the development of the country’s industries and overall economic growth. In 2004, President Olusegun Obasanjo’s administration launched the NIPP to address the challenge of power generation specifically. The project’s objectives also included curtailing the immoderate gas flaring from oil exploration. In order to achieve this, the Niger Delta Power Holding Company (NDPHC) was incorporated under the Companies and Allied Matters Act as a limited liability company to hold the NIPP assets. This limited liability company has three shareholders, the federal, state and local governments. Hence, through the NDPHC, the federal government holds 47 per cent, while the state and local governments own 53 per cent of the NIPPs. To initiate the launch of the NIPP, the National Assembly, alongside the National Council of State (NCS), approved $2.5 billion in seed funding from the Excess Crude Oil Account (ECOA). As of 2022, the NIPP had gulped about $7.875 billion. The original mandate of Phase 1 of the NIPP aimed for the power plants to collectively add 5,000MW to the country’s generation capacity. The plants were also to be privatised, with the profits reinvested into the NIPP Phase 2. The plants are namely: The second phase of the NIPP, which commenced in 2020, sought to develop new solar and hydropower projects in parts of the country without oil, especially the North. So, if the privatisation of these plants helps raise funding to be reinjected into the sector, why is there so much kick against FG’s proposed sale of five NIPPs? Through the Bureau of Public Enterprises (BPE), the federal government announced its decision to privatise five NIPP plants against the House of Representatives’ directive to halt the sale. The five power plants include Geregu, Omotosho, Olorunshogo, Calabar and Benin-Ihovbor. According to the BPE, the FG, which has previously shortlisted 16 companies at the Investor Pre-bid Conference, is assessing the pre-qualified bidders. On Monday, electricity consumers also opposed the sale of the NIPP assets. Although the House of Representatives’ reason to pause the sale was the FG’s adamance in selling the plants without the consent of the state and local governments, the electricity consumers had other reasons. The president of the Nigerian Consumer Protection Network (NCPN), Kunle Kola Olubiyo, stated that this was not the best time for the assets to be sold. The statement added that the considering the country’s current political clime, the funds could be diverted rather than reinvested. The statement further read, “We are not saying that the plants would not be sold at the appropriate prices and time in the future but not now when Nigeria is seriously battling challenges of deliberate load rejection by the Distribution Companies (DisCos) and deliberate low energy dispatch by the Transmission Company of Nigeria (TCN). The House of Representatives should look into the challenges and help in the overall public interest to avert needless chaotic energy crises that may come with sales of the five NIPP/NDPHC power plants by BPE.” Although valid, are these reasons objective enough to stop FG’s proposed sale of the five NIPPs? August 30, 2022 0 comment 0 FacebookTwitterPinterestEmail
Power Punch State of the NESI: DisCos Being Restructured for Unpaid Loans by aisi July 7, 2022 written by aisi The partial privatisation of the Nigerian power sector in 2013 led to the development of six Generation Companies (GenCos), eleven Distribution Companies (DisCos) and the government-run Transmission Company of Nigeria (TCN). Although the unbundling aimed to create a competitive electricity market for the Nigerian Electricity Supply Industry (NESI), that is not the case today. The current state of the NESI is DisCos being restructured for unpaid loans. The federal government recently announced that five (5) distribution companies would be reformed due to the inability to repay loans borrowed during 2013 unbundling. The affected DisCos are Benin Electricity Distribution Company (BEDC), Ibadan Electricity Distribution Company (IBEDC), Port Harcourt Electricity Distribution Company (PHEDC), Kaduna Electric and Kano Electricity Distribution Company (KEDCO). The announcement was made by the Executive Chairman of the Nigeria Electricity Regulatory Commission (NERC), Sanusi Garba, and the Director-General of the Bureau of Public Enterprises (BPE), Alex Okoh. They both stated that the move to reform the DisCos was necessary after Fidelity Bank activated the call on the collateralised shares of BEDC, Kaduna Electric and KEDCO. According to the statement, the bank made the activation due to the DisCos’ inabilities to repay loans used in acquiring assets for privatisation. This current state of the NESI involving DisCos being restructured for unpaid loans has a lot of intricacies. NERC and BPE have approved the list of new board members for the DisCos provided by the bank. BEDC: KC Akuma (Chairman), Adeola Ijose (Member), Charles Onwera (Member).Kaduna Electric: Abbas Jega (Chairman), Ameenu Abubakar (Member), Marlene Ngoyi (Member).KEDCO: Hasan Tukur (Chairman), Nelson Ahaneku (Member), Engr. Rabiu Suleiman (Member).IBEDC: Ahmed Kuru (Chairman), Eberechukwu Uneze (Member), Aminu Ismail (Member). However, to protect the government’s 40 per cent (%) interest in the DisCos, the BPE has also nominated Yomi Adeyemi (BEDC), Umar Abdullahi (Kaduna Electric) and Bashir Gwandu (KEDCO) and Oluwaseyi Akinwale (IBEDC). In addition, NERC and the BPE have appointed managing directors to ensure the process of business continuity for the DisCos: Henry Ajagbawa (BEDC), Yusuf Usman Yahaya (Kaduna Electric) and Ahmad Dangana (KEDCO). According to the statement: Lastly, we are restructuring the Management and Board of Port Harcourt DISCO to forestall the imminent insolvency of the entity. As a condition for support to the entity to meet its market obligations, Iboroma Akpana will take over as the Chairman of the Board. Emmanuel Okotete, Eyo Ekpo, Ismaila Shuaibu and the DG of BPE will form the interim Board. Mr Benson Uwheru will take over as the Managing Director of PHEDC as part of the changes. The current state of the NESI involving DisCos being restructured for unpaid loans was not the envisaged vision post-privatisation. As a result, experts have urged for the power sector’s privatisation to be reversed. In a statement, Kunle Olubiyo, President of Nigeria Consumer Protection Network, said: It is either the Federal Government do a mid-term review of the privatisation process or total reversal of the privatisation. We did not get it right… Mr Olubiyo added that the government has spent more on the sector post-privatisation than on the defunct National Electric Power Authority (NEPA) and Power Holding Company of Nigeria (PHCN). Privatising the power sector was supposed to yield increased generation and efficiency and attract private investment; however, DisCos being restructured for unpaid debts proves otherwise. July 7, 2022 1 comment 0 FacebookTwitterPinterestEmail
