China Southern Power Grid Shortlisted for Privatization of Nigeria's Power Sector

Festus Akanbi
Sunday, June 5, 2011

AES, Dangote Industries, Others Prequalified for Power Privatisations

Fresh facts have emerged over the identity of some of the 525 firms that were prequalified last week by the Bureau of Public Enterprises to take part in the next stage of the process for the privatisation of successor companies created from unbundling of the National Electric Power Authority - the precursor to Power Holding Company of Nigeria.

Investigations revealed that for the thermal (gas powered) generating stations, some of the prequalified bidders include AES Nigeria Barge Limited belonging to the Lagos State Government, and Korea Electric Power Corporation (KEPCO).

In a separate transaction, KEPCO in conjunction with Sahara Energy, a leading integrated energy company in Nigeria, formed a joint venture - KEPCO-Energy Resources Limited (or KERL consortium) in 2006 - and is already in advanced negotiations with the BPE for the acquisition of the 1,320MW Egbin power station in Lagos.

Another company that was prequalified to bid for the thermal generation companies is Abu Dhabi National Energy Company, while Dangote Industries Limited, featured on the list of bidders prequalified to bid for hydro generating companies.

Dangote Industries, belonging to business mogul Aliko Dangote, is believed to have expressed interest in acquiring controlling interest in the 600MW Shiroro Hydroelectric power station located in the Shiroro Gorge along the Kaduna River in Niger State.

For the distribution companies, companies revealed to have been shortlisted by the BPE include Hneso Energy Consortium; Israel Electric Corporation/Integrated Power Connect Projects; Oando Consortium; Tata Power Company; North Delhi Power Limited; and China Southern Power Grid Limited.

Israel Electric Corporation (IEC) is the main supplier of electrical power in Israel, and builds, maintains and operates power generation stations, sub-stations, as well as the transmission and distribution networks. The State of Israel owns approximately 99.85 per cent of the company.

Tata Power Company is India's oldest and largest private sector power utility with an installed generation capacity of over 2,977MW, while North Delhi Power Limited is a major distribution company in the Indian state of Delhi. It was created from the unbundling and privatisation of Dehli's state electricity monopoly Delhi Vidyut Board, in 2002.

China Southern Power Grid Company is one of the two state-owned enterprises established in 2002 by the Chinese government to reform the power system in the Asian country. The company is involved in the investment, construction and management of power transmission and distribution covering China's five southern Provinces of Guangdong, Guangxi, Yunnan, Guizhou and Hainan.

The BPE had announced last Wednesday that of the 331 consolidated bids received for the 11 distribution and six generation companies earmarked for privaisation, 525 companies were prequalified.

Each of the companies/consortiums is mandatorily required to pay $20,000 before being admitted into the data room for any of the companies they have shown interest in. They are also expected to sign confidentiality agreements with the privatisation agency.

The list of prequalified bidders were said to have been approved by the chairman of the National Council on Privatisation, Vice President Namadi Sambo, in line with the privatisation procedure, last week.

The distribution companies earmarked for sale are Abuja Electricity Distribution Company Plc; Benin Electricity Distribution Company Plc; Enugu Electricity Distribution Company Plc; Eko Electricity Distribution Company Plc; Ibadan Electricity Distribution Company Plc; Ikeja Electricity Distribution Company Plc; and Jos Electricity Distribution Company Plc.

Others are Kaduna Electricity Distribution Company Plc; Kano Electricity Distribution Company Plc; Port Harcourt Electricity Distribution Company Plc; and Yola Electricity Distribution Company Plc.

The thermal power generating companies are Ughelli Power Plc; Geregu Thermal Power Station; Afam Power Plc and Sapele Power Plc. The Hydro Power generating companies include Kainji Hydroelectric Plc and Shiroro Hydro Electric Plc.

Potential bidders are expected to be existing power distribution companies or core investor groups with power distribution companies as long-term technical partners.

At the deadline of March 4, 2011 for the submission of bids by prospective investors, BPE received 331 expressions of interest, which were broken into 174 for generating companies and 157 for distributing companies.

However, total number of individual bids for the successor companies increased to 929 when the 331 EOIs envelopes were opened and individual bids sorted out, according to a release by the BPE spokesman, Mr. Chukwuma Nwoko last week.