Wednesday, 17 October 2012

Ex Heads of State take over power sector

The coast may have become clear for companies backed by former heads of state, Generals Olusegun Obasanjo, Ibrahim Babangida and Abdulsalami Abubakar to take over greater part of the power generation and distribution interests in the on-going privatization of the power sector. 
Yesterday the Integrated Energy Distribution and Marketing Limited whose Board is chaired by former military head of state, Gen. Abdusalami Abubakar, topped the list of bidders to take over operations of four key Power Holding Company of Nigeria (PHCN) successor distribution companies (Discos).The distribution companies include those in Yola, Adamawa state, Eko and Ikeja in Lagos state and Ibadan in Oyo state. 
This is coming barely three weeks after companies said to have the backing of former military President, Ibrahim Babangida and former President Olusegun Obasanjo and business mogul Femi Otedola also won bids for strategic energy generating companies in the country. 
Also, Interstate Electrics Limited, a company linked to Chief Emeka Offor, a close associate of one of the former heads of state appeared set to clinch the Abuja Distribution Company as it offered the highest loss reduction target of 21.62 per cent as against KANN Consortium Utility Company Limited that offered 18.43 per cent.
Yesterday’s exercise was conducted in Abuja by the National Council on Privatization (NCP) Technical Chairman, Mr. Atedo Peterside, with government saying it will fetch it N197.25 billion being proceeds from sale of its 60 percent of the 10 Discos. A total of I6 investors participated in the exercise. 
Integrated Energy Distribution and Marketing Limited closed in on Ikeja Disco offering the highest loss reduction target of 22.5 percent. It also ranked highest for Yola Disco with18.5 percent and took Ibadan Disco and Eko Disco with 17.46 percent and 16.33 percent respectively. 
Oando Consortium and Honeywell Consortium ranked low behind Integrated Energy Distribution and Marketing Limited in their Aggregate Technical Commercial and Collection (ATC&C) loss reduction proposal for the Eko Disco for the next five years.
The two companies also ranked behind Integrated in the ATC &C loss reduction proposals for the Ikeja Discos. They proposed 14.29 percent and 16.25 percent respectively as against Integrated 22.51 percent.
However, in line with rules of the exercise, Integrated will have to decide on which of the companies to take after approvals by the NCP as no company is allowed to win more than one Disco.
Atedo told newsmen during an interview that any firm that emerged in two bids will have to indicate an order of preference by indicating which of the two he will like to go for one.
Also the bidding shows that Interstate Electrics led in its proposal with 20. 83 percent for the Enugu
Discos as it beats Eastern Electric Nigeria that proposed 15.99 percent.
Benin Disco produced Vigeo Power Consortium as its leading would-be buyer as it proposed 21.78 percent over Southern Electricity Distribution Company which proposed 17.72 percent.
The Jos, Kano, Port-Harcourt and Yola Discos have Aura Energy (16.22 percent), Sahelian Power SPV Limited (21.21 percent), 4Power Consortium (19.55 percent) and Integrated (18.58 percent) respectively as their sole bidders.
On process that would be adopted to arrive at wining firm, Atedo said; “We carried out some test for consistency which is in the rule and the result will be announced by the NCP. That is the process. I told you that the percentages are loss reduction estimate which are supposed to be passed back to the consumers so the person offering highest percentage loss reduction is offering the highest discount to consumers.
Speaking in an interview with newsmen, Director-General of Bureau of Public Enterprises (BPE),
Bolanle Onagoruwa said the next stage is evaluation of commercial bids presented by the firm.
According to her, “What they have done is presenting loss reduction target, and the firm with highest reduction target is ranked first but in that ranking first, you must also show that the loss reduction target is consistent with the business plan you have submitted. We are going to use MYTO model, in MYTO model, you can see the investment value over the next five year”. 
It would be recalled that last month, a consortium made up Transnational Company of Nigeria, Transcorp with offer of $300 million won the bid for Ughelli Power station in Delta state. Transcorp which is to have to do with Obasanjo is chaired by former Chief Executive Officer of UBA, Tony Elumelu, whose company Hiers Holdings has the single largest stake in the conglomerate.
Also North-South Power, believed to be backed by Babangida was declared the preferred bidder for the Shiroro Power Plant with an offer of $111.7 million as fixed annual fees and $236.8 million as commencement fees.

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