The Federal Government has concluded plans to privatise the remaining 10 Nigerian National Integrated Power Projects (NIPP), after signing a Memorandum of Understanding (MoU) with an infrastructure credit enhancement firm (InfraCredit) to provide up to N300 billion for investors.
The Privatisation which will be carried out this year by the Bureau of Public Enterprises (BPE), has been described as part of the Government’s efforts to boost power supply for Nigeria’s industrial expansion vision.
The Director-General of the BPE, Mr. Alex Okoh, disclosed the development in Abuja during the signing of the Memorandum of Understanding (MoU) with InfraCredit, for the guarantee of a longer tenor credit of up to 15 years for prospective investors in the NIPPs.
Back Story: The NIPP project was initiated in 2004 during the administration of the former President Olusegun Obasanjo. Its aim was to resolve power generation issues and excessive gas flaring resulting from oil exploration in Nigeria.
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The project included eleven power plants, four FGN Power Stations, and seven power plants in gas-producing states. Some of these include:
- Alaoji Power Station, Abia State,
- Omotosho II Power Station, Ondo State,
- Olorunsogo II Power Station, Ogun State,
- Geregu II Power Station, Kogi State.
- Ihovbor Power Station Benin,
- Calabar Power Station, Cross River State
- Egbema Power Station, Imo State
- Gbarain Power Station, Yenagoa
- Sapele Power Station
- Omoku Power Station, Rivers State, and
- Ikot Abasi Power Station, Akwa Ibom.
Together, the project reportedly generated contracts worth $414 million for the supply of turbines and electricity generation equipment to General Electric (GE).
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Still on the Privatisation Plan: It was also revealed that the state-owned Satelite Communications company, NigComSat, has been listed for privatisation.
The signed MoU with InfraCredit is aimed at de-risking the investments within public corporations while attracting investments from competent investors for long term financing in some of the corporations scheduled for privatization. This is according to the bureau’s Director-General.
He reiterated that the firm’s mission is to fruitfully unlock the potential for long term local currency infrastructure finance in Nigeria through advanced credit improvement solutions on an evolving basis and creating value for stakeholders.
The Credit Facility: Meanwhile, the Bureau’s DG revealed that as part of the signing, InfraCredit has committed as much as N300 billion worth of finance for the power divestment deals to investors.
“InfraCredit intends to partner with the Bureau to de-risk the financial environment, especially with regards to power sector investments. They have a target of achieving N300 billion worth of investment deals within three years.”
The development will, in turn, bolster the much needed all-encompassing corporate governance culture that would guarantee resources for investors and create sustainable value for the economy.
What this means is that the Integrated Power Projects currently managed by the Federal Government will now be ceded to private investors who are expected to bring fresh innovations on board. This is expected to ultimately help to resolve Nigeria’s electricity deficiency issues in no distant time.