Energy Central Professional


Rumpus Over Power Plants’ Sale

By Mohammed Shosanya  


    LAGOS - There is rumpus in the land among stakeholders in the nation's power sector over the planned sale of five power plants to 16 pre-qualified investors under the National Integrated Power Project (NIPP) of the Niger Delta Power Holding Company, First Royal Times can report.

    The House of Representatives, pressure groups and unions in the power sector are raising eyebrows and vowed to stop the sale of the power assets located in Calabar, Cross River State, Ihorbor, Edo State, Olorunsogbo, Ogun State, Omotosho, Ondo State and Geregu, Kogi State.

    Observers said the brewing crisis if not nipped in the bud would further unsettle the nation's troubled power sector.

    The 16 pre-qualified bidders include Mota-Engil Nig, Amperion Power, Sifax Energy, Pacific Energy Company Ltd and Globeleq Africa Limited.

    Others are Geoplex Drillteq Limited, Asfalizo Acquisition Ltd, Launderhill PJB, Lauderhill Tata, Unicorn Power Genco Ltd, Connaught Energy Services Ltd, ENL Consortium Ltd, Ardova Plc, Central Electric and Utilities Ltd, North South Power Consortium and Quantum Megawatt Consortium.

    Magaji Aliyu (APC, Jigawa), the Chairman of the House Committee on Power, had two months ago moved a motion seeking to halt the sales, saying the power assets belonged to the three tiers of government with the Federal Government owning 47 percent while states and local governments own 53 per cent.

    According to him, the Federal Government was adamant about selling the assets to fund the deficit in the budget without the consent of the other tiers of government and others.

    This paper reports that the Special House of Representatives Joint Committees are set to meet soon to begin the special parliament inquiry into the proposed sales of the five NIPP power plants by Bureau of Public Enterprises (BPE).

    This paper gathered that the action was necessary in order to protect the interest of Nigerians

    In what appears to be a predetermined intent, the Federal Government through the Bureau of Public Enterprises (BPE), has commenced due diligence assessment of the 16 pre-qualified investors shortlisted for the acquisition of the five power assets.

    An official of BPE told reporters that the next stage of the process was the bid opening stage.

    He noted that the government was currently carrying out due diligence on the 16 pre-qualified companies.

    "The BPE with the advisers are carrying out due diligence on the 16 companies to know if they are capable of managing the power firms before we open the bids. So for now no date has been set for the bid opening."

    Kunle Kola Olubiyo, President of the Nigeria Consumer Protection Network (NCPN), described the exercise as a miscalculated action that has national security implications

    He expressed concern over the ongoing process by BPE to privatise five NIPP plants under the Niger Delta Power Holding Company (NDPHC).

    He told this paper that at this point, any such action is self-serving and at very best, chronic form of national assets stripping coming at a time when the current President Muhammadu Buhari's administration is already on the verge of completing its tenure.

    He said some of the firms have hardly any experience in the business of power generation, which was also confirmed by another power analyst, who recalled how Nigeria sold some of the successor companies of the defunct Power Holding Companies of Nigeria (PHCN ) to inexperienced hands in 2013.

    Olubiyo said the plants under the NIPP of the NDPHC have always been infrastructure providing electrical power supply and national energy security. For instance, during the COVID-19 pandemic when the private investors of other Generation Companies (GenCos) ramp down electricity generation due to low revenue returns, the NIPPs being public assets, provided Nigeria with the much-needed energy security and its attendant socio-economic stability as it had to ramp up power supply to avoid economic and administrative shut down in the country.

    According to him, private firms in the power sector so far have not fared better than the NDPHC GenCos which have its gas obligations, gas pipeline assets, contributed to both transmission and distribution networks nationwide.

    He added: "Very recently, the gas producers have allegedly made claims of a legacy debt of about $1 billion. These legacy gas debts were accumulation over a long period of time and if at any point they stop supplying gas to the GenCos, Nigeria could be plunged into darkness if the NIPP GenCos are sold off and the entire power sector upstream is left at the whims and caprices of wholly private sector investors.

    Even when some of the NIPP/NDPHC GenCos have not been put to optimal use, the country is still seeing their impact on the national grid while serving as the nation's energy security backups.

    "What BPE and any designated agency of government should be thinking of at the moment is how to optimise the NIPP/NDPHC GenCos so that Nigerians can make the best use of this power sector intervention, as that was what they were designed for.

    The NIPP interventions which cut across the power sector value chain and implemented by NDPHC requires that the Nigerian Electricity Regulatory Commission (NERC) would have evaluated them and determined their real value.

    "However, for over nine years, NERC has been endlessly doing evaluation of these investment values without result. Without this evaluation to determine the Capital Expenditure (CAPEX) in the NIPP power sector intervention projects, NDPHC has been continually short-changed of revolving funds that should be re-invested into other power interventions in line with Nigeria's energy access for all targets of 2030.

    "The consumer network (NCPN) at the moment opposes any move to sell off five of the NIPP GenCos for now. 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), deliberate low energy dispatch by the Transmission Company of Nigeria (TCN) load dispatch managers from the various energy load dispatch centres and the National Control Centre in Osogbo, Osun state.

    "It is already election time and we believe that even if the five NIPP GenCos are sold, the proceeds may not be useful for the country and may just go into the hands of political cronies at the three tiers of government rather than a re-investment in NIPP/NDPHC revolving funds that could help in upscaling the investment milestones and expansion of the original ideals of the NIPP project's conceptualization.

    "Selling off the five NIPP plants may not guarantee their optimal performance as the new investors will have to begin a fresh journey of having some levels of Power Purchase Agreements (PPAs) and Vesting Contracts with the Nigerian Bulk Electricity Trading PLC (NBET).

    "However, at the moment, NDPHC has some already signed bilateral contracts for Take or Pay deal for gas supply agreement for some of the GenCos and come handy, to operates as national energy security backups, even private GenCos down tools, thus serving as a core energy security backup for Nigeria while earning revenue for the governments.

    He advised the government to join hands with experts and professionals like-minded people within and outside the power sector to come up with a comprehensive mechanism to address the decline in growth being generally witnessed in the areas of universal access to energy security, decline in energy load dispatch by TCN, decline in generation capacity, decline in energy load utilisation by the DisCos.

    He implored Nigerian government should also learn from the poor implications and delivery of the 2013 power sector privatisation exercise also carried out by the same BPE.

    Besides, the Coalition of 52 Northern Groups, CNG, has rejected plans by the Federal Government to sell five National Integrated Power Plants, NIPPs, to private sector operators.

    CNG's Director, Strategic Communication, Samaila Musa, in a statement issued in Abuja, said his group was alarmed by the insistence of Vice President Prof. Yemi Osinbajo to push the plan by the National Council on Privatisation and the Bureau of Public Enterprise to sell the Ihovba, Calabar, Geregu, Olorunsogo, and Omotosho power plants.

    "We had alerted of a grand conspiracy by powerful interests to sell these assets and further diminish the economic viability of the northern region.Particularly disturbing is that due to the COVID-19 pandemic, assets such as these ones have greatly lost value and would only be sold at a great national loss.

    "The CNG, insists that the power plants' equity through NIPPs is owned by the states and the LGAs alongside the Federal Government, which was designed and implemented in the South and eventually to be replicated in the North.We reject in its totality any such plan to dispose off the plants without replicating same in the North as per the initial agreement.

    "The CNG also demands for the Northern versions of the plants to be immediately established as agreed in 2004 when NIPPs were established.

    "We further demand that Northern federal lawmakers stand firmly against this attempt at mortgaging the future of the North. Northern governors must also demand that their States' equity would not be plundered.

    "We, therefore, condemn with all our might, this blatant illegality, unconstitutionality and abuse of office by the supposedly learned professional such as the vice president.For the avoidance of doubt, the CNG is prepared to go to any length to challenge this cruel, unfriendly, greatly biased and irresponsible policy."


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