Three factors frustrating sale of 10 power plants to private investors revealed
The pioneer Managing Director of Niger Delta Power Holding Company (NDPHC), James Olotu, has opened up on reasons why developments in the power sector have continued to look as if nothing is really happening in the last few years in Nigeria.
According to him in an interview, three factors had been delaying the planned sale of up to 10 completed power generation plants in Nigeria.
The key factors include endless fluctuations in the exchange rate, vandalism of gas pipelines and violence in parts of the country.
He revealed further that the development is delaying the gain of over 2.7bn profit that would have accrued to the three tiers of government from the sale of the plants under the National Integrated Power Projects (NIPPs).
It would be recalled that the NIPPs are owned by the federal, state and local governments and the power plants are managed by the Niger Delta Power Holding Company.
Olotu added that the said plants had been completed and fired up for use.
He disclosed that “The 10 NIPPs, among which six are currently producing and supplying power to the grid, were worth $7.1bn, even though some private investors had offered to pay $5.7bn for 80 per cent of the facilities, but this had yet to happen due to the three challenges confronting the process”.
He said whereas about $4.4bn was invested in constructing the 10 power plants, over $2bn would have been made by the three tiers of government if the assets had been sold to investors after all.
“Interested investors had complained of foreign exchange fluctuations, vandalism and violence in parts of the country, adding that these concerns had stalled the privatisation process for the plants.
“The entire investment of the NDPHC was $8.4bn. The investments we had in generation, out of that $8.4bn was $4.4bn. The investments we had in transmission network infrastructure development was about $2bn; distribution was $1.5bn; and gas was $500m. The rest was for administration, taking care of compensation, salaries, rents, etc.
“We put 80 per cent of the shares of the 10 power generation plants in the market, which include the finished and unfinished plants. We went to many parts of the world for roadshows. We were in Lagos, Hong Kong, New York and London – the real market places for international business. And at the end of the transaction, we were able to rake in $5.7bn for 80 per cent shares in the 10 plants.”
