The Federal Government will soon sell its stake in 3 power generation plants. Managing Director of the Niger Delta Power Holding Company (NPDHC) Chiedu Ugbo disclosed this in an interview. The privatization process commenced in 2012, but was suspended in 2013. The there plants to be privatized include the 630 MW Calabar, 1076 MW Alaoji and the 506 MW Geregu.
“But we are still on the privatisation process because the preferred bidders are still interested as much as they were in 2013. We still have them and we are working with them as we try to close these three transactions,”
What delayed the privatization process
Ugbo stated that the privatization process had been been delayed due to operational and structural issues such as gas supply, and tariffs but these issues were currently being sorted. Some of the plants are currently selling power at N18 per kilowatt, compared to N23 by other plants. Several of the plants also had gas supply issues, which are being resolved.
Implications of the resumed privatization
For a government that is cash strapped, selling of its stake in the plants provides it revenue. Existing investors in the plant would also be glad to see the government divest its stake, as this would enable them to carry out expansion and maintenance plans.
The NDPHC was established in 2004 as the National Independent Power Projects (NIPP) and is in charge of generating electricity through 10 power plants in the country. In addition, electiricity is supplied to host communities.Initial funding of $2.5 billion was gotten from the excess crude account after approval by the National Council of State and the National Assembly. The ECA is an account where crude oil proceeds beyond the budgeted amount per barrel are paid into.
The Federal Government thereafter incorporated the NDPHC as a legal vehicle to hold the assets. The projects where however delayed due to legal challenges from other tiers of government which were resolved in 2008, and an additional $5.3 billion was taken from the ECA to complete them.