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Tuesday, October 16, 2012

Power grab: Abubakar knocks out Tinubu, others to emerge preferred bidder

YNaija
..
Power grab: Abubakar knocks out Tinubu, others to emerge preferred bidder
Oct 16th 2012, 18:04

by Reuben Daba

Abdulsalami Abubakar, Nigeria’s former military ruler, who has led a mostly quiet life since he left office in 1999, today scored a very big win. For a very long time, the FG has tried to reform the electricity sector in the country. Part of the efforts in that regard involved selling off power distribution companies. That’s where Rtd. General Abdulsalami Abubakar came in. Abubakar who is presently the chairman of Integrated Energy, saw his company emerge as the preferred bidder in four out of the 10 distribution companies which were sold by the National Council on Privatisation.

The 10 companies were sold to the highest bidders today for the sum of 197.25 billion naira ($1.25 billion) as part of a plan to reform the country's moribund electricity sector.

Integrated Energy, partnered by Manila Electric, the largest power retailer in the Phillipines, bid for four distribution companies (DISCOS) in Yola, Ibadan and the two covering the commercial capital Lagos; Eko and Ikeja.

With it’s high scores, Integrated Energy beat competitors such as the OANDO consortium, Honeywell Energy Resources International Limited and Vigeo Holdings, which were also pre-qualified on September 18 to have their commercial bids opened today. The NCP, which is headed by Vice-President Namadi Sambo, had approved the eligibility of the firms for the exercise, which was initially billed for October 10 but later postponed till today.

According to a report:

Apart from Integrated Energy topping the bids for the four discos, Chrome Energy, which is chaired by billionaire businessman Emeka Offor, is part of the highest bid for assets in Enugu and Abuja.

Aura Energy, which according to its website was created to buy a coal mine, was the sole bidder for the Jos DISCO and could win by default, while 4Power Consortium, which is made up of several Nigerian companies and an Indian firm, was the only bidder for Port Harcourt, which covers the oil producing region.

Sahelian Energy, a three year old company with no experience of running power assets, was the lead company in the only consortium bidding for the Kano firm.

There were no qualified bids for the Kaduna firm.

"The NCP (National Council on Privatisation) is fairly confident that this process will produce the most appropriate core investors and fulfil the government's objectives of rapid transformation," NCP technical committee chairman Atedo Peterside said at the bid announcement in the capital Abuja.

The distribution firms (DISCOs), which are responsible for delivering electricity to end-users and collecting payment, were sold at a fixed price set by regulators, so bids were ranked on how efficiently the company promised to run the businesses.

Four of the firms – covering Jos, Kano, Port Harcourt and Yola – only had one approved bidder each.

Many of the companies involved in the bids have little or no power sector experience, while others are backed by powerful political interests but have technically capable partners.

In 2010, President Goodluck Jonathan announced plans to break up the state power company and sell it off as 11 distribution and six generation companies. He has promised a tenfold increase in electricity by 2020.

Previous state sell-offs in Nigeria were blighted by political infighting and corruption, which have caused years of delays. Regulators said this process has been more transparent.

Power outages, which amount to several hours per day, are the biggest brake on growth in Africa's second biggest economy and a frequent complaint of Nigeria's 160 million people.

Despite holding the world's seventh largest gas reserves, Nigeria only produces a tenth of the amount of electricity as South Africa for a population three times the size.

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