Preferred bidders emerge for Afam, Kaduna power firms

Power-TransformersTwo consortia on Wednesday emerged preferred bidders for two electricity companies, Afam Power Plc and Kaduna Electricity Distribution Company, offered for sale by the Federal Government.

With a bid of $260.05m, Taleveras beat TES Power to emerge the preferred bidder for Afam Power Plc, the last of the generating companies carved out of the Power Holding Company of Nigeria.

TES Power had offered $222.9m to emerge the reserve bidder for the generation company at the financial bid opening on Thursday, which saw only two potential investors fighting for the 60 per cent equity in the company put up for sale by the government.

Both companies met the reserved price for Afam at the first round of bidding and were, therefore, designated preferred and reserved bidders without any need to enter into a second round of bidding.

The Taleveras consortium is made up of Alstom Nigeria Limited, a company involved in the supply, operation and maintenance of power turbines.

The Alstom Group is a French company involved in power generation and transport; while Taleveras Petroleum Trading BV is a British West Indies company involved in physical trading of crude oil and refined petroleum products. The Rivers State Government also has a stake in the consortium.

Similarly, Northwest Power Limited emerged the preferred bidder for the Kaduna Electricity Distribution Company, the only remaining of the 11 distribution companies carved out of the PHCN.

The bidders for the Kaduna Disco were judged on the Average Technical, Commercial and Collection Loss Reduction they proposed to achieve should they acquire controlling equity in the company.

The eventual winner will pay the value of the company, which has been previously determined by the Nigerian Electricity Regulatory Commission.

The ATC&C, according to experts, is the percentage of power lost in the process of distribution that the bidders plan to reduce. It also expresses the efficiency they plan to achieve in collecting revenues from customers.

Northwest Power offered to reduce losses in the company by 29.26 per cent. The second bidder, the LEDA Consortium, offered an ATC&C of 26.71 per cent, while the NAHCO Consortium offered an ATC&C of 22.83 per cent.

Incar Consortium offered 22.73 per cent; Copperbelt Consortium, 21.01 per cent; and Axis Power Distribution Limited, 17.4 per cent.

Northwest Power and the LEDA Consortium were, therefore, designated the preferred and reserve bidders subject to the approval of the National Council on Privatisation chaired by Vice-President Namadi Sambo, which will also look at other criteria for the exercise.

The Chairman, Technical Committee of the NCP, Mr. Atedo Peterside, who presided over the financial bid opening ceremony, said the bidders for the electricity distribution company were judged on their ATC&C proposals because of the urgent need to reduce losses and create a self-sustaining electricity market.

He said, “The ATC&C loss levels will provide Nigerian electricity consumers and other stakeholders with specific parameters with which to measure the outcome of the power sector reform and privatisation programme.

“Indeed, successful bidders are contractually bound to deliver on the ATC&C loss levels that they submitted. The regulator will not adjust tariffs upwards to accommodate the inability of a Disco operator to deliver on the agreed ATC&C levels; rather, tariffs will be adjusted downward annually to reflect the agreed ATC&C loss levels irrespective of the operator’s ability to meet its contractual obligation.”

Also speaking at the event, the Director-General, Bureau of Public Enterprises, Mr. Benjamin Dikki, said the financial bid opening was a testimony to the success of the reforms of the power sector.

Afam Power Plc and the Kaduna Electricity Distribution Plc were among the 17 PHCN successor companies that were earlier advertised for sale in December 2010, and both, along with the others, went through a tender process that culminated in the submission of technical and financial proposals in July 2012.

 

Information from Punch was used in this report.

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