Power investors jittery over new govt

 

A wave of anxiety has descended on some private investors, who bought the successor electricity generation and distribution companies unbundled from the defunct Power Holding Company of Nigeria, following the emergence of Maj.-Gen. Muhammadu Buhari (retd) as President-elect. The Federal Government had on November 1, 2013 handed over 17 power firms to private investors in a bid to reverse the dwindling fortunes of the power sector.

The investors, according to an industry source who partook in the privatisation process, are now concerned that the Buhari-led government may shake up or upturn the privatisation exercise carried out by the President Goodluck Jonathan administration. “There is serious apprehension among the private investors who bought the privatised power firms over the fate of the assets they acquired, considering that a new government will take over next month,” the source, who asked not to be identified, told our correspondent. But an energy law and policy expert, who is also a Senior Associate at Banwo and Ighodalo, a Lagos-based law firm, Mr. Ayodele Oni, believes that the Buhari regime will not upturn the already concluded privatisation of the power sector. “Upturning same is inviting economic chaos and serious banking industry crisis as about 75 per cent of the financing came from Nigerian banks, and in many of those instances, almost outside their lending limits,” he said. According to him, what the new administration may very likely do is to enforce the agreed performance thresholds and standards. Oni said, “I believe the Vice-President-elect, who is likely to oversee the power sector, understands the nuances of the power sector and is, therefore, unlikely to take that approach. “The key issues the new government may want to look at, in relation to the privatisation, are: whether the new owners of the power companies are complying with the terms of the sale, and in particular, whether every purchaser indeed completed payment, and even more importantly, whether they are fulfilling their performance obligations in terms of volume of power generated and the reduction of aggregate, technical, commercial and collection losses.” According to him, a transaction the administration might, however, want to review is that relating to the Enugu Distribution Company, and in particular, Prof. Bart Nnaji’s Geometric. “I expect the administration to continue the reforms and to continue to implement the privatisation plan, with adjustment to cater to the privatisation/aggressive improvement of the grid, as the power value chain is only as strong as its weakest link (currently the grid and gas supply),” Oni added. He said more action needed to be taken in relation to gas, adding that more support should be given to certain individuals in the power and gas subsector who had performed well and same should not be relieved of positions they currently occupied. An energy expert and Technical Director, Drilling Services, Template Design Limited, Mr. Bala Zakka, noted that one of the key agendas of the incoming govern would be to tackle corruption, but said, “As far as the power sector is concerned, we will not expect the new government to just come and cancel or try to denigrate what has been in place.” He added that the incoming government would, however, carry out a detailed audit of the privatisation process, adding, “Our expectation is that the probing will be done for justice and fairness.” The Head, Public Communications, Bureau of Public Enterprises, the agency in charge of the privatisation exercise, Mr. Chigbo Anichebe, told our correspondent, “We don’t know the cause of their (private investors) concern. Privatisation started in 1988 under Gen. Ibrahim Babangida and not one that I can recall has been upturned. “We have done privatisation, especially of the power sector, transparently and it has been acclaimed by the international community as one of the most transparent transactions ever in the history of privatisation. “So, I don’t know why they should be concerned. What they need to do is to do their own part by investing more and growing the sector.” The Discos and their owners include Ikeja Electric (NEDC/KEPCO Consortium), Jos Distribution Company (Aura Energy Limited), Kano Distribution Company (Sahelian Power SPV Limited), Port Harcourt Distribution Company (4Power Consortium), Yola distribution Company (Integrated Energy Distribution & Marketing Limited), and Abuja Distribution Company (KANN Consortium Utility). Others are the Benin Distribution Company (Vigeo Power Consortium), Eko Distribution Company (West Power & Gas), Enugu Distribution Company (Interstate Electrics Limited), Ibadan Distribution Company (Integrated Energy Distribution & Marketing Limited) and Kaduna Distribution Company (Northwest Power Limited).