hastened because he battled with the vice-president, Namadi Sambo, who owns companies with interests in the public power sector. Sambo also oversees the government’s national privatisation council and heads a programme to build ten new state power stations that Mr Nnaji hoped to privatise.
Mr Nnaji also incurred Dangote's displeasure because a bid from Nigeria’s richest tycoon arrived apparently minutes late, and therefore was rejected.
It has also been revealed that two former heads of state, retired Generals Ibrahim Babangida and Abdulsalami Abubakar, as well as former Governor of Lagos State and leader of the Action Congress of Nigeria (ACN), Senator Ahmed Bola Tinubu, are the promoters of some of the bidding consortiums contesting for the 18 companies unbundled from the Power Holding Company of Nigeria (PHCN).
Reforming electricity in Nigeria; A bright spark is extinguished - The president’s most vaunted reform is flagging but must be revived - The Economist
ALTHOUGH Nigeria has almost as many inhabitants as Brazil, it produces only 5% of the electricity. Many Nigerian leaders have tried to boost the state’s power supply, but many more have become rich by obstructing it, earning fees from private generation and stealing official funds meant for new power plants. When he was elected last year, President Goodluck Jonathan promised to make electricity reform his big thing, hoping to transform the lives of millions of Nigerians who have spent decades in the dark.
But the resignation of his power minister on August 28th over a conflict of interest has exposed the rot in a process that seemed to be running relatively smoothly. Bartholomew (“Barth”) Nnaji, a respected technocrat who had been minister of power since last year, was meant to sell six generating companies and 11 distribution companies. Months ago he declared that a firm in which he owns shares held in a trust was involved in the bidding. It is not unusual for Nigerian politicians to engage in business overseen by their office; what is unusual is for any of them to resign.
Mr Nnaji’s supporters say that opponents of privatisation belatedly and unfairly engineered his departure. “Nnaji was the best person for the job,” says an adviser at the presidential task-force on the reform of power. “But he was getting in the way of other interests.”
The minister had certainly made enemies. He took on trade unions opposed to mass job cuts. A key aspect of privatisation is unbundling the Power Holding Company of Nigeria, a bloated and ill-managed monopoly, with thousands of “ghost” workers on the payroll. Two-fifths of the staff are apparently listed as drivers. Mr Nnaji tried for months to negotiate redundancy terms, as otherwise serious investors are unlikely to bid. It remains to be seen whether the unions have won the battle. Privatisation may be delayed.
Mr Nnaji also warred with the vice-president, Namadi Sambo, who owns companies with interests in the public power sector, oversees the government’s national privatisation council and heads a programme to build ten new state power stations that Mr Nnaji hoped to privatise. This may have hastened his departure.
Worrying signs have also emerged over transparency. Watchdogs were at the last minute relegated from being active participants in evaluating bids to observers, says a consultant. Their role is important because firms may win bids with lofty promises but fail to get finance or honour their contracts. This has hampered past privatisations. The current list of bidders is longer than expected and includes many local firms. Preferred bidders may be announced next month.
According to the government, the power sector needs $10 billion of investment a year for at least a decade. Mr Nnaji’s resignation is troubling investors who feel he brought expertise to a process that had previously been paralysed by corruption. Watched by foreign development agencies, eligible bidders have so far been selected in a clean and efficient manner. When a bid from Nigeria’s richest tycoon, Aliko Dangote, arrived apparently minutes late, it was rejected.
Most important for investors, a new tariff system, which will see a gradual increase in electricity prices over the next two years, came into effect in June. It is meant to ensure profitability. President Jonathan imposed the new tariffs despite worries that they would spark mass protests. In January Nigeria came to a standstill when he removed fuel subsidies. He partially reinstated them. This time, taking no chances, he agreed to new electricity subsidies for the poorest households for at least two years. But he no longer has a high-profile power minister to hide behind.
IBB, Abdulsalami, Tinubu Lead Battle for PHCN Assets - THISDAY
http://www.thisdaylive.com/articles/ibb-abdulsalami-tinubu-lead-battle-for-phcn-assets/124309/Two former heads of state, retired Generals Ibrahim Babangida and Abdulsalami Abubakar, as well as former Governor of Lagos State and leader of the Action Congress of Nigeria (ACN), Senator Ahmed Bola Tinubu, are the promoters of some of the bidding consortiums contesting for the 18 companies unbundled from the Power Holding Company of Nigeria (PHCN), THISDAY investigations have revealed.
This is coming as the workers of the ailing power utility giant have called for the re-evaluation of bids for companies slated for privatisation.
Also topping the list of promoters is an oil magnate, Sir Emeka Offor; business mogul, retired Colonel Sani Bello; as well as allies of Vice-President Namadi Sambo.
North South Power Company Limited, which is believed to be promoted by Babangida, passed the technical evaluation for the Shiroro Power Station and would participate in the financial bid stage.
North South Power Company was the only consortium that submitted bids for Shiroro, while Dangote Power and Super Tech belonging to business mogul, Aliko Dangote and Professor Jerry Gana, respectively, submitted late bids and were automatically disqualified.
Integrated Electric Nigeria Limited, promoted by retired General Abubakar as chairman, Mr. Tunde Ayeni and Dr. Shola Ayandele, is contesting with other bidders for Eko, Ibadan and Yola Distribution Companies.
However, the chances of the company’s bids for Eko and Ibadan Discos are slim due to the presence of Oando Gas and Power, Lagos State Government, Tinubu and Honeywell in the contest.
THISDAY learnt that Integrated Electric has however passed the technical evaluation for Yola Disco, which is awaiting the approval of the National Council on Privatisation (NCP).
For Ibadan Disco, Integrated Electric will compete against Western Consortium, promoted by Oando Power and Tinubu. Integrated Electric and Western Consortium are believed to have passed the technical bid stage for Ibadan Distribution Company, which is awaiting NCP’s approval.
Mainstream Energy Solutions Limited, supported by Bello, passed the technical evaluation for Kainji Power Station and is set to participate in the financial bid.
It also submitted a bid for Jebba Power Station but it is not yet clear if any of the bidders for Jebba was successful, as there was no announcement made by the NCP on the status of the technical bids submitted for the hydro power station.
The Oando Consortium, believed to be promoted by Oando Gas and Power, Lagos State Government and Tinubu, is battling with other bidders for Eko and Ikeja Distribution Companies.
Also in the race for Eko and Ikeja Discos are: Ampiron Power Distribution Limitedand Honeywell Consortium, promoted by Mr. Oba Otudeko.
The Lagos State Government, it was gathered, decided to hedge its bets by also submitting a bid alongside the Honeywell Consortium, as it is bent on acquiring a stake in the two Lagos-based distribution assets.
The state government has made it abundantly clear that whoever wins Eko and Ikeja Discos would have to deal with it owing to its massive investment in distribution infrastructure and rural electrification projects over the years.
Meanwhile, Offor’s Interstate Electric Nigeria Limited is slugging it out with several other bidders, which include Eastern Electric Nigeria Limited for Enugu Distribution Company.
THISDAY gathered that there are 30 per cent unalloted shares in the Interstate Electric bid which was submitted to the Bureau of Public Enterprises, fuelling speculation that the shares may have been reserved for investors with the financial muscle to enhance Interstate’s bid for Enugu Disco.
Eastern Electric, on the other hand, is backed by Time Power Global Dynamics, believed to be sponsored by Ernest Azudialu’s Nestoil; Nifex Limited; Aba Power and Geometric Power Limited, which belongs to the former Minister of Power, Prof. Bart Nnaji; and the governments of Abia, Anambra, Enugu and Ebonyi States.
It is believed that the refusal by the Imo State Government to bid under any consortium stemmed from Governor Rochas Okorocha’s close relationship with Offor.
In the case of Port Harcourt Distribution Company, Four Power Consortium, promoted by the governments of Rivers, Cross River, Akwa Ibom, Bayelsa States and other private sector bidders, is contesting against Rockson Engineering, promoted by the owner of Arik Air, Sir Joseph Arumemi-Johnson.
Southern Electric Distribution Company, which submitted bids for Benin Distribution Company, indicated that it has the commitment of the government of Delta State, while Rockson Engineering indicated that it has a similar commitment from the Edo State Government.
A top member of the NCP is believed to be behind Skipper Nigeria Limited, which is bidding for Kaduna Distribution Company against NAHCO Energy and Power Limited.
However, none of these bidders was successful, compelling the BPE to come up with three fresh options, which it intends to submit to NCP, on how to handle the failed bids for Kaduna Disco.
The first option is to re-advertise the company to harvest a new batch of expressions of interest from prospective investors; the second option is to allow those that submitted late technical and financial bids and were rejected by the BPE to submit their bids; while the third is to invite other bidders that lost out at the financial bid stage to submit fresh bids for Kaduna Disco.
Skipper Nigeria Limited is however believed to have passed the technical re-evaluation conducted by a new committee set up by the NCP for Afam Power Station, but is subject to NCP's approval. Skipper had slugged it out with NPG Consortium and Primeniza Energy Limited.
The reconstituted evaluation team comprised officials from the Ministries of Works and Power, Infrastructure Regulatory Concession Commission and Bureau of Public Procurement.
Sahelian Energy, which was pre-qualified for Kano Distribution Company, is promoted by Alhaji Yusuf, a ministerial nominee of Vice-President Sambo, who did not pass the security screening.
However, Kepco Consortium, promoted by Sahara Energy, is still in negotiations with the BPE for the takeover of Egbin Power Station, subject to NCP and the Federal Government's approval.
State governments such as Lagos, the four South-east and four South-south states are believed to have joined various consortiums after they were encouraged by the BPE to submit bids for the distribution assets.
Under the privatisation programme, the state governments are automatically entitled to two per cent but can get a maximum of eight per cent through the bidding consortiums due to their ownership of the right of way in their states and their massive investment in the distribution and rural electrification network.
THISDAY gathered that another reason the states were encouraged to participate in the process stemmed from the difficulty in carving out the distribution network and delineating boundaries in the immediate term, but this could happen in the future as the market structure evolves.
Also, there were concerns that it will be difficult to place a value on the investment by the states in distribution and rural electrification infrastructure, thus necessitating that they bid for the distribution assets through the privatisation process.
Meanwhile, electricity workers under the aegis of the National Union of Electricity Employees (NUEE) have called for the re-evaluation on the grounds that Nnaji’s resignation implied that there might have been some undue influence in the overall management of the privatisation process.
In a letter to Sambo who doubles as the Chairman of NCP, the union also requested the report of the valuation of PHCN which puts the assets and liabilities of the corporation at N200 billion.
It stated that the valuation of a company like PHCN should be transparently done with active participation of all stakeholders.
The letter signed by the General Secretary of the union, Comrade Joe Ajaero, advised that persons who are politically vulnerable should not be allowed to participate in the privatisation exercise.
“To us it is altruism that the undue influence issue might not have been restricted to Afam Power Plant and Enugu Electricity Distribution Zone of PHCN alone, we believe the whole process has been grossly infested by the menace.
“With all sense of patriotism, we demand also for the report of the valuation of PHCN assets and liabilities that actually came up with the current value of PHCN put at N200 billion only.
“The valuation of a company like PHCN should be transparently done with active participation of all stakeholders.
“We believe that this is the only way credibility and transparency would be seen to have returned to the whole privatisation process. This will enhance investors’ confidence and those of the international community,” the union stated.
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