power line transmissionThe new owners of the privatised companies from the unbundled Power Holding Company of Nigeria (PHCN) have been given a target to ensure increased generation of an additional 5,000MW within the next five years.

Speaking during the formal handover of share certificates and licences to the new core owners of the PHCN successor companies, at the Presidential Villa Abuja recently, Vice President Namadi Sambo emphasised that the target has been captured in the performance agreement reached with the investors.

He said: “The new owners of the generation companies are expected to build up capacity from the present levels of performance to additional 5,000MW within a period of five years. This promise has already been clearly captured in the performance agreement that the new owners have with the Bureau of Public Procurement (BPE) which will be monitored by the regulator.”

“As for the distribution companies, the Aggregate technical, Commercial and Collection (ATC&C) loss reduction programme for the first five years as the privatisation strategy for the selection of core investors for distribution companies was used as a measure.”

He explained that the criteria were a clear departure from the National Council of Privatisations (NCP) usual practice of awarding companies to the bidder who makes the highest financial offer to purchase an asset after being technically qualified.

According to him, “the objective behind this strategy is to provide Nigerian consumers and other stakeholders with specific parameters with which to measure the outcome of the power sector reform and privatisation.”

He further listed the investment incentives available for investors in the privatisation of the electricity utility to include duty exemption for equipment for gas-fired generating companies, five year tax holiday and setting up of the Nigeria Electricity Liability Management Company (NELMCO) to take over outstanding liabilities as well as the World Banks securitisation to protect their investments.

The government also stated that it would maintain the agreed gas pricing policy with the new generation company owners in order to encourage new investments in gas supply and infrastructure development, adding that the new owners would also inherit signed gas supply and transportation agreements which is a new phenomenon in the gas-to-power industry, aimed at moving the industry away from the prior status of the best endeavour supply and transportation basis.


Information from Leadership was used in this report.