So much have been written about the sale of the power distribution companies (discos) that are been privatized by the Federal Government yet rather than understand the process most people (like me) even get more confused. For that reason I decided to get the details and help my readers (and myself) understand who bidder for what and how some bidders became preferred bidders.
According to the website of the Presidential Task Force for Power, Distribution in a nutshell can be described as the “downstream” sector of the electric power industry. It involves delivering power directly to homes and industries. Lines and transformers of much lower capacity (ranging from 33KV/415V to 11 KV/415 V) are used in the distribution sector. The distribution aspect of electricity also directly involves dealing with the consumer and overseeing such functions as meter installation, billing for power consumed and revenue collection. Distribution firms purchase the power they deliver to consumers from power generating firms/plants that are separate firms. The Power Plants will cut off supply to the discos once they cannot pay for generated power delivered to them. This ensures the distribution companies put in place robust systems for receiving payments from consumers. It is for this reason that the sale of the power discos must be to the bidder with the most technical ability to deliver. It is not simply about their ability to pay the highest bid sum as in the case of the power plants.
What and who is the FG Selling to
The Federal Government is selling a 60% stake in the 10 Power Distribution companies currently earmarked for sale. The Federal and State Government both share ownership of 40% of the remaining equity. A total of 54bidders met the July 31 deadline from about 80 for submission of technical and financial proposals for the privatization of the eleven distribution companies created from the unbundling of Power Holding Company of Nigeria (PHCN). From there the following were shortlisted;
PLS SCROLL BELOW FOR UPDATED LIST OF APPROVED WINNERS OF THE BIDS
The FG and States is therefore going to make about $1.2billion dollars from a 60% stake of the sale of equity in the discos. Whilst the figure seem impressive it is difficult to estimate how much profit the FG will be making on the disposal of the discos considering how much has been spent and lost to corruption in the past. They also seem to have used Depreciated Replacement Cost of Assets as determined by MYTO in estimating the value of the discos.
Criteria for Selection of Preferred Bidders
For what I understand the preferred bidders are selected based on their ability to show the most average technical, commercial and collection (ATC&C) loss reduction projection or efficiency ratio over a 5year period . This basically means, a bidder who shows the most ability to reduce the most technical and non-technical losses when power is being distributed will be chosen. For example, when power is generated and transferred between distribution lines energy that ought to have been consumed is lost before getting to the transformers. Further energy is also lost from the transformers as it is passed on to the ultimate consumers. This energy losses are non uncommon and is also peculiar in other developed economies.
This losses in energy end up being a loss in revenue which would have been gained had it being captured and consumed by the end user. Also, non-technical losses for example refer to customers who consume electricity but do not get billed or do not just pay for bills for various reasons. Examples are villages and areas that PHCN does not even get to or people who are able to consume power but do not pay as they do not have meters. Therefore, the ability for the bidder to reduce this loss the most will result in more revenue for the discos and off course better value for tax payers. It is based on this that preferred bidders are shortlisted.
From what I saw on TV during the bid process, no bidder can have more than two discos and eventual winners will have to demonstrate realistic capacity to reduce these losses as proposed.
This in a nutshell is the A-Z of the power discos. For more information, follow all the links embedded in the post above and off-course as I learn more I will update accordingly. Updated Information (News Article)
Technical Committee on Privatisation, Mr Atedo Peterside, announced that under generation companies, NCP approved that Amperion Power Distribution Company Limited, with a bid of USD$132,000,000 was the preferred bidder for the core investor sale of 51% shares of Geregu Power Plc.
It also approved that Mainstream Energy Solutions Limited, which offered an annual fee of USD$50,760,665.18 and a commencement fee of USD$257,000,000, was the preferred bidder for the concession of Kainji Hydro Power Plc.
NCP approved that North-South Power Ltd, which offered an annual fee of USD$23,602,484.87 and a commencement fee of USD$111,654,534, was the preferred bidder for the concession of Shiroro Hydro Power Plc.
The privatisation body also approved that Transcorp/Woodrock/Sumbion/Medea/PSL/ Thomassen, with a bid of USD$300,000,000, was the preferred bidder for the core investor sale of 100% shares of Ughelli Power Plc.
NCP also approved that Amperion Power Distribution Company Limited, with a bid of USD$252,000,000, was the preferred bidder for the core investor sale of 100% shares of Geregu Power Plc.
NCP approved that CMEC/EURAFRIC Energy JV Consortium, with a bid of USD$201,000,000, was the preferred bidder for the core investor sale of 100% shares of Sapele Power Plc.
NCP similarly approved that JBN-NESTOIL Power Services Ltd, with a bid of USD$106,500,000, was the bidder for the core investor sale of 100% shares of Sapele Power Plc.
For the distribution companies, which are being privatised 60 %, the NCP approved KANN Consortium Utility Company Ltd, Abuja Distribution Company, Vigeo Power Consortium for Benin Distribution Company, West Power & Gas for Eko Distribution Company and Interstate Electrics for Enugu Distribution Company.
Others are Integrated Energy Distribution & Marketing Ltd for Ibadan Distribution Company, New Electricity Distribution Company (NEDC)/KEPCO for Ikeja Distribution Company, Aura Energy Ltd for Jos Distribution Company, Sahelian Power SPV Ltd for Kano Distribution Company, Sahelian Power SPV Ltd for Port Harcourt Distribution Company and Integrated Energy Distribution & Marketing Ltd was approved as the preferred bidder for Yola Distribution Company.