NCP Approves Buyers Of PHCN Firms Monday

The National Council on Privatisation (NCP) will Monday meet to approve the preferred bidders for the five generation and 10 distribution companies created from the unbundling of the Power Holding Company of Nigeria (PHCN).

The generation companies (Gencos) are Sapele Generation Company, Geregu Generation Company, Ughelli Generation Company, Shiroro Hydro Generation Company and Kainji-Jebba Hydro Generation Company.

The distribution companies (Discos), on the other hand, are Eko Electricity Distribution Company, Ikeja Electricity Distribution Company, Abuja Electricity Distribution Company, Yola Electricity Distribution Company, Ibadan Electricity Distribution Company, Benin Electricity Distribution Company, Enugu Electricity Distribution Company, Port Harcourt Electricity Distribution Company, Jos Electricity Distribution Company and Kano Electricity Distribution Company.

The privatisation of two other successor companies – Afam Generation Company and Kaduna Distribution Company – was deferred following the non-prequalification of bidders by the NCP to move on to the next stage of the privatisation exercise.

Whereas the NCP’s approval Monday of the five preferred bidders such as Trancorp, Amperion and North South Power Company for the generation companies (gencos) is expected to be hitch-free, that of the discos is already mired in intrigues arising from the recommendation by the Nigerian Electricity Regulatory Commission (NERC) that the “presumed” preferred bidder for the Abuja and Enugu Discos be disqualified.

THISDAY learnt from sources in the Ministry of Power that Interstate Electrics Limited, led by billionaire businessman, Emeka Offor, which posted the highest aggregate technical, commercial and collection loss (ATC&C) projection, to edge out other competitors on October 16 for Abuja and Enugu Discos, failed the consistency test conducted by NERC.

The consistency test is a model formulated by NERC to ascertain if the bidder/company’s loss projections are consistent with its business and financial plans that were included in its technical bid, as well as NERC’s Multi-Year Tariff Order (MYTO 2).

Interstate Consortium, comprising Chrome Energy, Power House International Limited and Metropolitan Electricity Authority (MEA) of Thailand, had beaten Eastern Electric Nigeria Limited, a consortium backed by the four South-eastern states (except Imo); oil and gas service provider, Nestoil; and Geometric Power Limited, a company owned by the former Minister of Power, Prof. Bart Nnaji.

To edge out Eastern Electric, Interstate submitted a commercial bid with an ATC&C loss projection of 20.83 per cent as against 15.99 per cent submitted by Eastern Electric. 

Interstate also had a higher ATC&C loss projection figure of 21.62 per cent to beat KANN Consortium Utility Company Limited with an ATC&C loss target of 18.43 per cent.

However, both the Chairman of the Technical Committee of the NCP, Mr. Atedo Peterside, and the Director General of the Bureau of Public Enterprises (BPE), Ms. Bola Onagoruwa, had warned on the day of the commercial bid opening that the bidders should not consider themselves winners, as their loss projections would still be subjected to a consistency test by NERC.

It has since emerged that during the test undertaken by NERC, Interstate was the only “presumptive” preferred bidder that failed, which automatically should disqualify it and the reserve bidders – Eastern Electric and KANN Consortium – selected to undergo the same consistency test.

But ministry sources said that ever since Offor got wind of his fate, he has been fighting tooth and nail, and lobbying those in the corridors of power to ensure that the NCP announces his company’s name as the preferred bidder for the Abuja and Enugu Discos Monday.

Power Ministry sources said Offor, who has extensive political contacts in and outside government, is leaving no stone unturned to get the two distribution assets, even though his companies failed the NERC’s test.

But one source said he would have to contend with the four state governments in the South-east, whose consortium – Eastern Electric – is waiting in the wings and watching to see if the NCP accepts NERC’s recommendations or not.

Other bidders, however, who beat other contenders on October 16 do not have the same problem with Offor’s company, as Integrated Energy Distribution & Marketing Limited, which won the bids for Ikeja, Eko, Yola and Ibadan Discos passed its consistency test.

But since the privatisation rules bar one operator from owning more than two discos, Integrated will forgo Ikeja and Eko Discos and is expected to be announced the preferred bidder for Yola and Ibadan Discos. The Ibadan Disco is the largest in the country in terms of coverage and infrastructure.

With Integrated’s notification that it was not interested in Eko and Ikeja, the ATC&C loss projection figures submitted by the reserve bidder - New Electricity Distribution Company (NEDC), comprising the Korea Electric Power Corporation and Sahara Energy – was then subjected to the consistency test.

NEDC, THISDAY gathered, is said to have passed the test too, but can only select one of the two Lagos-based discos, as the rules also do not allow a single operator to run both companies.

As a result, NEDC has opted for the Eko Disco, while Vigeo Power Consortium, which also scaled through the consistency test, will take over Ikeja Disco.

Other companies expected to be announced preferred bidders today include 4Power Consortium for Port Harcourt Disco, Sahelian Power SPV Limited for Kano Disco and Aura Energy Limited for Jos Disco, as all three passed the NERC test.

In a related development, NERC has asked the promoters of Southern Electricity Distribution Company (SEDC) to provide it with concrete evidence of misconduct by the BPE during the sale of the Benin Disco for thorough investigation.

Following the commercial bid opening held for the discos, four states – Edo, Ekiti, Delta and Ondo – with interests in Southern Electricity, had kicked against the emergence of a rival bidder, Vigeo Power Consortium, for the Benin Disco.

The governors of the states had accused the BPE of rigging the transaction in favour of Vigeo, and conducting a process that was flawed, fraudulent and lacking in transparency, promising to take their complaint over Vigeo’s emergence to President Goodluck Jonathan.

However, NERC told THISDAY that it would not hesitate to look into any form of foul play in the sale of PHCN successor companies, especially the Benin Disco, if SEDC could substantiate its allegations of fraud in the privatisation process.

Chairman of NERC, Dr. Sam Amadi, said the commission was closely observing the situation in the wake of the allegations made against the NCP and BPE by the governors, but is yet to receive any form of petition from the consortium specifying its complaints, along with evidence to prove its allegations.

In denying the allegations, NCP stated that the consortium had breached the investment schedule guidelines for the Request for Proposals (RFPs) provided by BPE to all bidders.

Peterside, had at a press briefing in Lagos last week revealed that SEDC submitted multiple commercial bids for the same disco, in clear violation of the RFPs.
He dismissed the allegations that the bid for the discos organised by the BPE was fraudulent.

Amadi however said: “We have not noticed any problem so far because the BPE is handling the situation very well. However, we must be very careful about making statements and as well as meddling in the matters as we are aware of the efforts that BPE has put into the process.

“But so far, the governors who alleged that the process was fraudulent have not made any concrete allegations so far, they have not petitioned NERC and have not stated where the process was fraudulent but just made mere accusations without concrete evidence to back them up.”

He explained: “If there is any petition from them stating where the process went wrong and with concrete evidence to that effect, we will definitely investigate the process as a regulator.”