New owners take over operations of Gencos, Discos
FG: sustainable electricity now rests on new managers
By Our Correspondents


A major milestone was achieved Friday in the nation's bid to reposition the power sector for stable electricity supply with the hand over of operations of the privatised generation and distribution companies to their new owners.

At yesterday's events, four power generation companies; Ughelli Plant, Geregu I Plant, Kainji Hydro and Shiroro Hydro, and ten distribution companies, namely, Ikeja, Eko, Ibadan, Jos, Kano, Yola, Abuja, Benin, Enugu and Port Harcourt, from the now extinct Power Holding Company of Nigeria (PHCN), were handed over to their owners - who had cumulatively paid about $3 billion (N480 billion) in August.


At the handing over ceremony of Abuja Distribution Company to KANN Consortium Utility, Vice President Namadi Sambo, who was represented by the Minister of Power, Prof. Chinedu Nebo, noted that the power privatisation programme was historic as it represents the biggest divestment programme of public utility in Africa.


He explained that the government now relies on the financial and technical capacities of the new private investors to help advance its plans to ramp up power generation and supply in the country.


He said it was the fear entertained by government against possible asset stripping that informed its insistence on investors with proven financial and technical capacities for the assets.


"Reputable, buoyant and financially stable owners were selected to avoid assets stripping. We are sure that there will be no more business as usual but business unusual in the sector going forward," Sambo said while assuring Nigerians that the reforms being implemented in the sector by the government would increase consumers’ access to electricity and in turn stimulate economic growth.


He said: "The participation of the private sector would bring about higher generation capacities through the provision of more efficient and cost effective power stations and improvements in electric power distribution, in the areas of billing and collection, and transmission networks."


Sambo however warned the new owners of the public utilities that government would sanction any of them who fail to deliver on the agreement reached with it.


He assured workers of the defunct PHCN that government remains committed to meeting up with its agreement with them, adding that about N360 billion had been spent on the settlement of their entitlements.


He stated that the remaining N30 billion needed to complete the payment was ready and that government would keep to its own part of the bargain which enabled its handover of the power assets to the new owners.


In Kogi, Geregu Power Station was handed over to Amperion Power Distribution Company Ltd. The Managing Director, of the Geregu Power station, Engr Adeyemi Adenuga, said that the power station was being owed over N15. 93 billion by market operators, a fact which he said had hampered the expansion of the station.


The eighteen business units that make up the Enugu Electricity Distribution Company (EEDC) in the five South East states were also handed over to the new owner, Interstate Electric Limited.


New Chief Executive Officer of the EEDC, Mr Robert Dickerman, said that through the change in control, "there will be some reshaping of the company’s strategy, goals and objectives".



In Kogi, Geregu Power Station was handed over to Amperion Power Distribution Company Ltd. The Managing Director, of the Geregu Power station, Engr Adeyemi Adenuga, said that the power station was being owed over N15. 93 billion by market operators, a fact which he said had hampered the expansion of the station.


The eighteen business units that make up the Enugu Electricity Distribution Company (EEDC) in the five South East states were yesterday handed over to its new owner, Interstate Electrics Limited.


New Chief Executive Officer of the EEDC, Mr Robert Dickerman, said that through the change in control, "there will be some reshaping of the company’s strategy, goals and objectives".


He assured members of staff that they would be considered as shareholders of the company as a way of creating in them a sense of belonging, while calling on all to support the new vision of the company.


Outgoing Chief Executive Officer of the EEDC, Engr. Suleiman Yahaya, said that the Enugu distribution company was made up of 18 business units covering Imo, Anambra, Enugu, Abia and Ebonyi States and have resourceful workforce that, if given the right infrastructure, would grow into sustainable and profitable company.


Chairman of the Interstate Electrics, Sir Emeka Offor, said that as an investor from the Southeast, he would as fast as possible restore the confidence of the Southeast in the company.


Among members of the new board are former Senate President, Ken Nnamani, former Minister of Torism, Prince Kayode Adetokunbo, Dr. Stephen Dike, and Mr Kester Enwereonu.


Also in Yola, Adamawa State capital, the Federal Government officially handed over the Yola Distribution Company to Integrated Energy Distribution and Marketing Limited. Senior Special Adviser on Power, Engr O.S Egberongbe, who stood in for the Vice President, said the development was made possible because of the administration's commitment to the roadmap for the provision of stable power to drive the economic transformation of Nigeria.


The Transnational Corporation of Nigeria (Transcorp), the new owner of the Ughelli power plant in Delta State, said it would increase the output of the plant from the current 330megawatts to 1,500megawatts within the next three years.


Speaking yesterday during the handover ceremony of the plant to the new owner, the Chairman of Transcorp, Mr. Tony Elumelu, said the Ughelli plant would be at the forefront of the current efforts by all the stakeholders to improve power supply in the country.


Elumelu, who was handed over the plant by Vice President Namadi Sambo, represented by the Minister of Labour, Chief Emeka Wogu, commended President Goodluck Jonathan for the successful conclusion of the privatisation exercise.


In Port Harcourt, 4 Power Consortium took over the operations of the Port Harcourt Distribution Company. Speaking at the ceremony, the Permanent Secretary, Federal Ministry of Power, Godknows Igali, said the hand over was a culmination of 14 years of painstaking efforts by the Federal Government, through the national Council of Privatisation (NCP) and the Bureau of Public Enterprises (BPE) to reform and liberalise the nation’s power sector.


Igali also revealed that between April 22 and September 2013, the Federal Government had released 60 per cent share certificates to new investors and owners in the power sector.


He further explained that the Federal Government had fully paid about 40, 698 workers of the Power Holding Company of Nigeria, PHCN and another set of 14, 900 out of 40, 000 had received their full pension entitlements.

The Chairman of the 4Power consortium Group, Sir Augustine Wokocha, said the hope of the new owners was to accelerate, to a supersonic speed, the hitherto slow returns on investments, as they would be charged with the zeal and enterprise of the private sector.


Noting that the PHED covers four states namely: Bayelsa State, Rivers State, Aqua Ibom State and Cross River State, which covers a service territory of about 39,206.25 sq km and a total population of 14 million, he however expressed regret that, only 530,000 customers which is a paltry 3.8 per cent of the population of the area were connected to the national grid.


In Edo, Vigeo Power Limited took over the operations of Benin Electricity Distribution Company (BEDC) as new owner. Its Chairman, Otunba Victor Gbolade Osibodu, urged the Federal Government to conclude the payment of entitlements of PHCN workers to enable new investors who took over the various companies to enjoy a stable working environment.


In Lagos, the Power Holding Company of Nigeria (PHCN) successor company, Eko Electricity Distribution Company plc (EKEDC) was handed over to its new investor, West Power and Gas (WPG).


Dr. Oladele Amoda of EKEDC said they would also be monitoring their successor in term of ways they operate, whether it would be in line with the agreement signed.


At the handing over ceremony of Jos Distribution Company, the Chairman of Aura Energy Limited (AEL), the new owner, Alhaji Tukur Modibo, assured consumers that the era of uninterupted power supply had come. He, however, warned customers that were in the habit of conniving with electricity workers to dupe the company that such would not be tolerated.


The Jos Electricity Distribution Company comprises Plateau, Benue, Gombe and Bauchi states.


At the ceremony in Ibadan, where the ownership of Ibadan Eletricity Distribution Company was formally transfered to its core investor, Integrated Energy Distribution and Marketing Company Limited, formally took over, representative of the new owners, Mr Olatunde Ayeni, said the vision of the investors was to transform into a world class organisation and become a leader in the electricity distribution industry.


In his own speech, Governor Ibikunle Amosun of Ogun State said any nation which failed to get its power supply right would not witness progress. Governor Ajimobi of Oyo State urged Nigerians to cooperate with the new owners.

POWER REFORM TIMELINE

2000 National Council on Privatisation (NCP) sets up Power Sector Reform Implementation Committee

2002 New draft legislation is produced to repeal the Electricity Act

2002 Electric Power Sector Reform (EPSR) Bill is submitted to National Assembly as an executive bill

2005 Electric Power Sector Reform Bill is passed into law

2005 Nigerian Electricity Regulatory Company (NERC) is established

2006 National Electric Power Authority (NEPA) is wound up and Power Holding Company of Nigeria (PHCN) established
2006 PHCN is unbundled into successor companies comprising 11 distribution companies (Discos), six generation companies (Gencos) and one transmission company

2007-2009 Power reform programme is stalled under the Umaru Yar’Adua administration

2010 Power reform programme is restarted by President Goodluck Jonathan with the establishment of the Presidential Task Force Committee on Power headed by Professor Barth Nnaji

2010 Power sector reform blue print is launched, paving the way for NCP and Bureau of Public Enterprises (BPE) to commence the privatisation of the successor companies

2012 Manitoba Hydro is appointed to run the Transmission Company of Nigeria (TCN) in September under a management contract

2013 Preferred bidders emerge for six Gencos and 10 Discos in January (privatisation of Afam Power Station and Kaduna Disco are restarted). Egbin power station, which was partially sold in 2007 by the Olusegun Obasanjo administration, is thrown into the mix

2013 Preferred bidders pay initial 25 percent and outstanding balance (75 per cent) on August 22 for the power utilities. CMEC/Eurafric is the only bidder unable to conclude payment for Sapele power station

2013 New owners of the Gencos and Discos are handed their share certificates on October 2

2013 New owners of the Gencos and Discos takeover the physical assets on November 1

rozayx5: good one, i hope tinubu does not call this one deceitful and diversionary

Following the controversies which shrouded the privatisation programme of the federal government during the administration of former President Olusegun Obasanjo, the National Council on Privatisation (NCP) had in 1999 constituted the Electricity Power Sector Implementation Committee (EPIC) to undertake a comprehensive study and review of the entire industry in order to prepare grounds for liberalising the electricity power sector to attract private sector investment and ensure competition in the market.

Prior to the enactment of the Electricity Power Sector Reform Act (EPSRA), 2005, the Federal Government was responsible for policy formulation, regulation, operation, and investment in the Nigerian power sector. However, EPSRA Act became law in 2005, providing legal backing to the power sector reform programme, leading to the launch of the Power Sector Roadmap by President Goodluck Jonathan in August 2010.

Subsequently, the Nigerian Electricity Regulatory Commission (NERC) was reconstituted to give the required institutional support to ensure a balanced regulatory framework to protect both investors and consumers. Also, the Nigerian Bulk Electricity Trading (NBET) was further created to provide securitisation which was seen as critical to driving power production efforts.

The services of a management contractor-Manitoba Hydro International (MHI) of Canada was also engaged in fulfilment of the power sector roadmap to reorganise the Transmission company of Nigeria (TCN) into technically, financially and commercially viable and market driven company.

The Unbundling of PHCN Companies
The federal government also established the Power Holding Company of Nigeria (PHCN – the initial holding company) and subsequently unbundled it into eighteen (18) successor companies to transfer of management and financing of successor company operations to the organised private sector; establish an independent and effective regulatory commission to oversee and monitor the industry as well as focus the federal government on policy formulation and long-term development of the industry, among others.
The objective was to achieve increased access to electricity services, improved efficiency, affordability, reliability and quality of service and greater investment in the sector to stimulate economic growth.

Successor Companies
However, the unbundling leaves the Federal Government with three hydro and seven thermal generating stations with a total installed capacity of about 6,852MW, with available capacity of 3,542MW (as of 31st July 2010).
Each entity had been incorporated as a single-asset generating company; a radial transmission grid (330kv and 132kv), owned and managed by the TCN, with the responsibility of undertaking the system operation and market settlement functions, respectively as well as eleven distribution companies (33kv and below) that undertake the wires, sales, billing, collection and customer care functions within their area of geographical monopoly.

A competitive tender was thereafter carried out to receive bids from core investor groups (inclusive of competent generation asset owner/operators) for a minimum of 51% of equity in the following successor thermal generating companies including Afam Power Plc; Sapele Power Plc; Ughelli Power Plc; Geregu Power Plc as well as a separate concessioning process for successor hydro generating companies including Shiroro Hydro Power Plc; Kainji Hydro Power.

A similar competitive tender was carried out to receive bids from core investor groups (inclusive of competent distribution asset owner/operators). They are Abuja Electricity Distribution Plc; Benin Electricity Distribution Plc; Eko Electricity Distribution Plc; Enugu Electricity Distribution Plc; Ibadan Electricity Distribution Plc ; Ikeja Electricity Distribution Plc; Jos Electricity Distribution Plc; Kaduna Electricity Distribution Plc; Kano Electricity Distribution Plc; Port Harcourt Electricity Distribution Plc and Yola Electricity Distribution Plc.

Remarkable Patronage from Investors
In December 2010, the NCP advertised for Expressions of Interest (EOIs) from prospective core investors interested in acquiring controlling stake in the 11 successor distribution firms created out of PHCN. By March 2011 deadline for submission of EOIs, 180 applications were received.

However, 80 bidders were shortlisted. The bidders were later reduced to 72-prequalified bidders when some of the prospective firms couldn’t pay the mandatory $20,000 fee to purchase the Request for Proposals (RFPs).

Further to the exercise, by the submission deadline of July 31, 2012, the BPE had received 54 proposals from pre-qualified bidders, out of which 10 of the bids failed the first test of completeness and responsiveness. The remaining 44 bids were subjected to full technical evaluation out of which 32 bids submitted by 20 bidders scored the minimum of 75 per cent that was needed to move to the next stage. They were subsequently asked to submit post qualification bidders’ guarantee following approval of the evaluation by the NCP.

Eventually, after several hurdles, the NCP in October 2012 approved 14 preferred bidders for the Power Holding Company of Nigeria (PHCN) generation and distribution companies in its ongoing privatisation programme.

Rising from its sixth meeting, the Council, in Abuja, affirmed Amperion Power Distribution Company Limited, Transnational Corporation of Nigeria Plc Consortium, CMEC/Eurafic JV Consortium, Mainstream Energy Solutions Limited and North-South Power Limited as the preferred bidders for the five thermal and hydro power stations being sold by the Federal Government to core investors. However, billionaire businessman, Mr. Emeka Offor, who failed the consistency test conducted by the Nigerian Electricity Regulatory Commission (NERC), but fought very hard to hold on to the Abuja and Enugu Distribution Companies (Discos), was forced to settle for only Enugu Disco.

The NCP also disqualified Southern Electricity Distribution Company for submission of multiple bids for Benin Disco and announced Vigeo Power Consortium as the preferred bidder for the distribution company.
At the expiration of the January 31 deadline for the submission of Expressions of Interest (EOIs) from prospective bidders for the two companies, the BPE received 19 applications for Kaduna Disco and 29 applications for Afam Generation Company.
Consequently, on February 4, the privatisation agency sent Requests for Proposals (RFP) to the 48 prospective bidders.
The Afam and Kaduna discos were among the 17 PHCN successor companies that were earlier advertised for sale in December 2010 along with the 15 other PHCN Successor Companies that went through a full competitive tender process, which culminated in the submission of technical and financial proposals in July 2012.

Temporary Hitch in privatisation Process
However, following the rigorous technical evaluation that all bids were subjected to, none of the bids received for the Afam and Kaduna utilities scored the minimum 75 per cent required to progress to the financial bid stage.

The Afam plant bid was particularly nullified because the former Minister of Power, Prof. Barth Nnaji was said to have links with one of the firms which bided for the asset. The incident led to the Minister’s resignation, thereby raising doubts over the transparency of the programme while many doubted if it would ever be concluded successfully.
The development forced the National Council on Privatisation (NCP) to order a re-run of the entire transaction as it was not prepared to settle for a second best. Consequently, the pre-due diligence conference for the re-tender of Afam Power Plc and Kaduna Electricity Distribution Plc was on March 4 in Abuja.

Grappling with Payment Deadline
Initially, some of the preferred bidders had difficulties getting credit from their financiers over controversial circumstance. However, at the end of the August 21 deadline, 13 preferred bidders fulfilled the payment of the remaining 75 per cent of their bids for the power generation and distribution companies, except for Interstate, the preferred bidder for Enugu Distribution Company failed to meet the deadline. It eventually complied. CMEC/EUAFRIC Energy JV, which also had compliance issues was referred to the legal arm of the NCP for advise.

Labour issues
The privatisation programme had however, been bedevilled by labour related issues. Power sector workers had vowed to cripple the exercise if their severance benefits were not taken care of before the companies were eventually transferred to their new owners.
As a result, there had been pockets of protests by workers to compel government to accede to their demands.

However, the Federal Government which was determined to create a hitch free transition had said it had equally set aside the entire proceed of N384 billion from the sale of power assets to settle labour liabilities. A total of $3 billion is expected from the proceeds.
At the last count, the BPE said it had despatched a team of consultants and its staff for the biometric data capture of 1, 478 employees of the Enugu Distribution Company who could not be audited because of virus attack on the system were their names were stored.

The Labour Angle
However, on September 30, President Goodluck Jonathan formally handed over Share certificates and licences to 14 new core owners of PHCN successor companies.
Jonathan praised Nigerians for exercising great patience and confidence “putting up often with darkness, noisy power generating sets, related pollution and daily disruption in their lives” and assured them of better days ahead.

Ordinarily, the formal transfer of assets should have allowed the new investors immediate access to the power utilities but Minister of Power, Prof. Chinedu Nebo, said that could only be possible when the remaining PHCN workers would have been paid their entitlements within October in order to have a smooth and peaceful transition.

Meanwhile, Jonathan, while admitting a number of limitations with actual service delivery noted that there had been remarkable progress with steady and sustained increase in national power generating capacity.
He however, promised Nigerians that “things can only get better, from this point onwards.”
Jonathan further said while the power sector could not be revitalised overnight, measures were being carefully worked out to address all other issues particularly the resolution of labour-related concerns.

He said: “In partnership with the labour unions, we have been able to come up with an outcome that is beneficial for all stakeholders...the payment of all labour-related benefits commenced earlier in August this year, and is almost concluded as a condition precedent to today’s event.”
Jonathan said: “We can all look forward to a better time very soon as we have seen in telecommunication and banking sectors. I am confident that the power sector will promise no less, knowing the calibre of those who are taking over.

jacksol: So, who are now supposed to be working at the substations and switch rooms? Old PHCN staff or new private co staff?
I ask because there had been a total blackout in my area since yesterday. It's unusual. We used to get at least s few hours at night.
Has anyone else experienced the same?

homesteady: At last!
But what happens to the defunct PHCN staff that haven't gotten their gratuity?
Because I know a couple that are both working in PHCN and they are yet to be paid a kobo!

Sincere 9gerian:
Payment will continue till the end of November

Sincere 9gerian: The privatisation is killing several birds with one stone:

1. Elimination of public sector CORRUPTION in the power sector. This is fighting corruption using SYSTEMS that work.

2. Elimination of govt bureaucracy from the power sector. You no longer require the approval of the minister in Abuja to have faulty transformers in your locality changed.

3. Removal of govt inefficiencies in the sector.

greatgod2012: I just hope it'll be for better service sha, and we won't have to be shouting UP NEPA or asking when light is brought each time we arrive home and meet light.

Sincere 9gerian: The privatisation is killing several birds with one stone:

1. Elimination of public sector CORRUPTION in the power sector. This is fighting corruption using SYSTEMS that work.

2. Elimination of govt bureaucracy from the power sector. You no longer require the approval of the minister in Abuja to have faulty transformers in your locality changed.

3. Removal of govt inefficiencies in the sector.

revolt: That our clueless aboki president yaradua actually Stalled the privatisation process so his ppl intrsts wnt be touched. Same thing he did to soludos redecimalisation, fackn aboki, and apc wants to return another one! GOD FORBID

amarilo: What happened to [people owing NEPA bill? Is that written off?

phantom: i hope this marks the end of blackouts.uninterrupted power supply will accelerate the economy so fast it will make our heads spin