For the greater part of the nation’s 53 years of political independence, the Federal Government was the sole regulator and operator in the power sector. It made the laws, regulations and policies. The government was also involved in generation, transmission, distribution and marketing of electricity in the entire nation.
Private investors had no serious roles to play, except some that had the connections to serve as contractors and suppliers. They were relegated to the background. In other words, the nation’s power sector was not only closed to Nigerians but also private investors and financiers in all parts of the world. Consequently, the development of the sector was stagnated because of lack of significant inflow of resources, especially funds and human capital.
But the old order seems to be changing. With the privatisation of 15 Electricity Generation Companies, GENCOs and Electricity Distribution Companies, DISCOs, the private investors who have the expertise, financial muscles and discipline are squaring up for active participation. Their active involvement becomes a reality following their ability to pay for the privatised firms.
As the Chairman of National Privatisation Council Technical Committee, Mr. Atedo Peterside pointed out: “By the payment deadline of 21 August, 2013, private sector core investors had paid a total of $1.130 bn for 60per cent equity controlling stakes in nine Discos (namely Abuja, Benin, Eko, Ibadan, Ikeja, Jos, Kano, Port Harcourt and Yola).
He said: “The core investors for the 10th Disco (Enugu) paid their $126m late and so the National Council on Privatisation (NCP) directed that they must pay a late penalty fee equal to Libor + 5per cent for the number of days for which they were in default and the preferred bidder for the 11th Disco (Kaduna), which has a separate time-table, is expected to pay a total of $163m within 6 months, thereby completing the $1.419bn that was originally targeted from the sale of all 11 Discos.
Peterside said: “For the Gencos, a total of $1.077bn was received from the core investors by the same 21st August, 2013 payment deadline date for equity stakes ranging between 51% and 100% in 4 Gencos (namely Egbin, Geregu, Kainji and Ughelli), while the core investor for the 5th Genco (Shiroro) completed its $111.6m payment a few days late and will also pay a late penalty fee equal to Libor + 5% for the number of days for which they were in default.
He said: “It is pertinent to remember that this is really the “beginning of a journey” and not the “end of a journey” as some have mistaken it to be. As we all know, the purpose of privatising the Discos and Gencos was not just to transfer ownership of the assets. The primary purpose was to bring into play new owners with “deep pockets” who could finance and/or access financing for the rapid restoration of lost capacity and/ or add significant new capacity to make up for decades of Government neglect and mismanagement.”
Consequently, the buyers are set to take over ownership of the firms. President Goodluck Jonathan has already handed over share certificates and licenses to the new owners of the GENCOs and DISCOs. The President, who urged labour to cooperate with the government to complete the programme and development of the sector, restated Federal Government commitment to providing all elements that are necessary for success of private investors. He also stated that: “We do not expect the sector to be revitalised overnight but we can look forward to a better time soon as we have seen in the telecommunication and banking sectors.”
He stated that the success recorded in the privatisation of the GENCOs and DISCOs has encouraged government to start the privatisation of the generation assets of the new National Integrated Power Projects, NIPP of the Niger Delta Power Holding Company of Nigeria, NDPHCN, jointly owned by the Federal, States and Local Governments.
Jonathan, who noted that there are challenges in the reform process, remarked that they are being tackled to pave way for sustainable development of the sector. Jonathan said: “It is important to say to our labour partners, who we know to be patriotic Nigerians that they should not nurse feeling of displacement, but dwell on the tremendous possibilities that the revitalisation of the sector holds for them and the future.
Jonathan who restated his administration’s commitment to providing all elements necessary for private investors to succeed in business said: “To the Nigerian people who have demonstrated such great patience and confidence, putting up often with darkness, noisy power generating sets, the related pollution and the daily disruption in their lives, I say better days are coming.
Expectedly, the sector has started to attract support from different parts of the world. For instance, President Barack Obama of United States, through Power Africa disclosed the commitment of seven billion dollars over the next five years to support six African countries, including Nigeria. USAID Mission Director, Mr. Michael Harvey said: “the U.S. will continue to partner with Nigeria to advance a seamless transition from public to private sector management of the power sector to ensure that the Nigerian people have access to electricity.”
More than that, over 100 foreign firms were in Lagos last week to explore investment opportunities in the emerging sector. The foreign firms, include Zhuhai Pilot technology Company Limited, Yueliang Commercial Company Limited, Yamuna Power & Infrastructure Limited, Wilson Cables Pvt Limited, Westinhouse, Voltamp Energy SAOG, Tongun Electric, The Motwane Manufacturing Company Pvt Limited, The Faraday Centre Limited, Tag Corporation and Sterling & Wilson Limited.
They also include, Solarway FZE, Smartgen Tecnology Company Limited, Secure Meters Limited, Shreen Limited, Sassin International Electric Shanghai Company Limited, Recons Power Equipment Pvt Limited, Secure Meters Limited, NAFFCO FZCO, Selatan Jadi Jaya, Phenix Systems AG, Raychem RPG (P) Limited, Power Engineering Sales Limited and Eland Cables which specialise in various aspects of the power sector.
While some of the firms have concluded plans to establish manufacturing plants to produce various facilities, including meters others would prefer to provide goods and services directly or through indigenous agents and representatives. For instance, the Business Development Manager of Secure Meters Limited, Mr. Amit Gupta said: “We are presently looking for indigenous firms to partner with us because Electricity Distribution Companies need meters in order to provide electricity to consumers in all parts the country.
He said: “The firm is credited with pioneering solid state electronic metering in India. With a small beginning, secure meters blossomed to a $150 million group with diverse interests in electronic metering, software, revenue management systems, homes energy controls; IT and IT enabled services for the utilities and industries across the globe.”
Some potential investors who preferred not to be named said they were not impressed with the relatively low level of indigenous participation in the sector. He said: “We came expecting to meet many local firms to partner with us. But we are presently not impressed because we have not been able to engage with any serious indigenous investors in the sector.
But the National President of the Oil and Gas Service Providers Association of Nigeria, Mr. Colman Obasi attributed the situation to the fact that the electricity market, and by extension the sector is still in a pre-transition stage. He remarked that the sector would attract more investments and develop in a sustainable manner later as it moves from pre-transition to transition, medium and long term.
However, investigations showed that the GENCOs and DISCOs have started to test their systems and processes for efficient operations in different parts of the nation, including Lagos. For instance, officials of West Power that has taken over the Ikeja Electricity Distribution Plc were seen engaging foreign partners to ensure that their systems and processes are ready for sustainable operations.
Observers who perceived these as bold steps have called on all stakeholders, especially the Federal Government and labour to work toward successful completion of the remaining activities in transition from government to private ownership of investments in the sector which holds so much for the socio- economic development of the nation.
Information from National Mirror was used in this report.