N10bn debt: Power investors struggle to beat deadline

To avoid possible sanctions by the Nigerian Electricity Regulatory Commission, private power investors that last week defaulted in remitting about N10bn to the Federal Government’s coffers struggled to beat the 24-hour deadline.

The actual amount remitted by the firms could, however, not be confirmed as of Sunday.

The commission had on Wednesday threatened to sanction errant firms if they failed to pay up their debts before 4pm on Thursday.

The Chairman, NERC, Dr. Sam Amadi, had stated that the remittances were monies meant for services rendered to the companies by the government and directed the power firms to make the payment to the electricity Market Operator.

But Amadi, in a telephone chat with our correspondent on Sunday, said the electricity distribution companies had started complying.

He said, “I may not be able to give you the actual details now; but I believe they have started responding. I will call the Market Operator to get the actual facts and by Monday (today), we will know the true position of things.”

 

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Privatisation of PHCN: From bad to worse!

 

Following the receipt of their certificates of ownership of the unbundled PHCN companies, the new owners of Discos and Gencos in Nigeria are already asking for increases in tariffs for electricity yet to be generated or delivered to poor Nigerians. This no doubt betrays their ignorance at least in the whole subject of electricity supply business. I first expressed my concern as to the realisation of electricity in Nigeria when I saw the calibre of companies who have won the bids for the unbundled PHCN utilities. My main concern was that most of the winners have no idea of how electric current flows. Unlike many businesses that could be managed by entrepreneurs from Economics and Finance backgrounds, experience reveals that the business of electricity generation, distribution and supply requires more than econometrics. More is involved in the way of understanding how current flows!

The new owners of the recently privatised PHCN companies have demanded an upward review of the provisions of the Multi-Year Tariff Order (MYTO) which means they want an increase in price of electricity they are yet to deliver to our homes. Of course this is not the first time poor Nigerian consumers have had to pay electricity bills for electricity they have not consumed. Nigerians have always paid for the corruption of a few and the ineptitude of those who pretend to offer invaluable services to us. Much like in the days of NEPA and PHCN, where there was no change except for name and acronyms, it seems the “Privatisation of the Electricity Supply Industry” in Nigeria is heading for a world acclaimed disgrace. Why do I so say?

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Power privatisation: Nigerians lament deteriorating power supply

By SEBASTINE OBASI & KUNLE KALEJAYE

Yemisi Oyebanji, a widow, who owns a small scale frozen food shop in Ojodu area of Lagos, has been a sad woman in the last one month. Though her husband died four months ago, her sadness stemmed from the fact that her small shop, which she started in early September may soon be closed due to dwindling electricity supply.Speaking to Sweecrude on her ordeal she said “Since the first week of November, I have been encountering losses on a regular basis, as the products in my freezers easily get spoilt due to the constant blackout in this area. I lost four cartons of chicken and three cartons of turkey worth about N40, 000 in the last three weeks due to poor power supply. Not only do I encounter blackout, the bill has increased. How can a small shop like mine pay as much as N9,500, as against the N3, 000 I paid last month?” She queried.Oyebanji told Sweetcrude that the constant blackout is threatening her means of livelihood and has put her in a position that she would not know how to take care of her five children who are below 11 years. Her condition was made worse by the fact that she has no generating set as a backup, thus leaving her at the mercy of public power supply.

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Power privatisation: Operators raise concern over MYTO2 compliance

By CHRIS OCHAYI

 

There are serious indications that the power sector privatisation exercise is experiencing some hiccups following alarms raised by some core investors in Distribution and Generation of electricity Companies over the insistence on strict compliance on Multi Year Tariff Order, MYTO 2.These developments emerged at a general meeting with the new owners of all successor companies, organised by Nigerian Electricity Regulatory Commission, NERC, in Abuja to apparently weigh the initial problems of the Discos and Gencos and craft interventions that will address such challenges.Many stakeholders, who spoke at the meeting lamented the non-functionality of the MYTO2 following the prevailing realities which they insist make compliance difficult, urging the NERC to review the realities on ground rather than hold them with their business plan.In his remarks, the Managing Director/CEO of Kano DISCO, Dr. Jamil Gwamna, express grief that his company is not getting the required power allocation as stated in the MYTO which has drastically led to short fall in revenue generation.Jamil Gwamna explained that the company received less than two percent of the designated eight percent distribution allocations to it as provided in the guidelines in non-compliance to the MYTO2 model.

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Privatisation: Nigerians lament deteriorating power supply

 

Yemisi Oyebanji, a widow, who owns a small scale frozen food shop in Ojodu area of Lagos, has been a sad woman in the last one month.

Though her husband died four months ago, her sadness stemmed from the fact that her small shop, which she started in early September may soon be closed due to dwindling electricity supply.

Speaking to Sweecrude on her ordeal she said “Since the first week of November, I have been encountering losses on a regular basis, as the products in my freezers easily get spoilt due to the constant blackout in this area.

I lost four cartons of chicken and three cartons of turkey worth about N40, 000 in the last three weeks due to poor power supply. Not only do I encounter blackout, the bill has increased.

How can a small shop like mine pay as much as N9,500, as against the N3, 000 I paid last month?” She queried.

Oyebanji told Sweetcrude that the constant blackout is threatening her means of livelihood and has put her in a position that she would not know how to take care of her five children who are below 11 years.
 

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Massive investment in power generation faces new investors

 

New investors in the power sector would need to make significant investment in maintenance, repair, overhaul and construction of power stations to bridge the huge generation gap plaguing power supply in the country, BusinessDay has learnt.

Nigeria is targeting 40,000 megawatts (MW) generating capacity by 2020, but power generation currently hovers between 2,500MW and 3,500MW for a population of over 170 million people.

 

The severe power supply crisis rocking many parts of the country since the hand-over to the investors had been largely attributed to a dip in generation capacity.

Mike Uzoigwe, managing director and chief executive officer, Egbin Power Plc, the biggest single power plant in the country, speaking at the 80th anniversary celebration lecture of the CKC Onitsha Old Boys Association, Lagos branch, on Wednesday, said, “There is a huge generation gap that needs to be closed to ensure steady power supply in the country.”

In his presentation on ‘The Nigerian Electricity Power Story: the Way Forward’, he said: “We have found the way forward. It might take time, but it is going to happen. Something significant has been achieved in the last twelve months, but a lot still needs to be done. We need to attain a greater understanding of the journey we have embarked and the pitfalls ahead.”He said the nation needs at least 25,000MW of power generation to ensure stable supply to the population of over 170 million people. The nation achieved peak generation of 4,517MW on December 23, 2012.

While noting the challenge of gas supply to power plants and incessant sabotage of gas pipeline by vandals, he said Egbin power plant which is supposed to be generating 900MW has been doing 500MW in the last three months.

It would be recalled that following the vandalism of the Okpai Power Plant in Delta State at the weekend, power supply to the national grid dropped to about 3,300MW.

 

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What Nigerians should expect from new power investors

 

Successful privatisation of the power sector has raised the hope of Nigerians on improved power supply in the country. TUNDE DODONDAWA examines what should be expected from the new investors in the next six months in view of the existing reality on ground. Excerpts:

The scepticism and uncertainty surrounding the privatisation of the power sector, which commenced officially in 2005 following the enactment of Electricity Power Sector Reform (EPSR) Act 2005, was laid to rest on November 1, 2013, when the Federal Government, after decades of failed attempts to fix the sector, finally completed its sale and handed the successor companies over to the private investors.

Prior to that date, the Federal Government had invested several billions of dollars in the sector but it hardly generated up to 5,000 megawatts (MW) of electricity for a population of 160 million.

Besides, the transmission network is so weak that it is incapable of conveying more than 4,000MW, hence the frequent system collapse, which results in massive power failure across the country.

Expectations by Nigerians
Ordinarily, the private sector is seen as a better manager of resources than the government, hence, the takeover of the power sector by the private sector is seen as a big relief and Nigerians are full of expectations that power will improve significantly.

Ironically, the taking over of the power sector was marred by frequent power outage in most part of the country.  

Although, the Director-General, Bureau of Public Enterprise (BPE), Mr Benjamin Dikki, assured Nigerians that improvement in power supply would only be felt after six months of handing over because of the huge investment required and the fact that the spare parts needed to replace some old and dilapidated equipment will have to be imported over a period of four to five months.

 

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Privatisation: 90% PHCN staff have been paid –Minister

 

The Minister of Power, Prof. Chinedu Nebo, has said the federal government has achieved 90 per cent success in the payment of former PHCN workers’ severance packages and pension as a total of 40,093 workers have already been settled.

Prof. Nebo disclosed this yesterday when the Donor Coordinating Group, led by the United Nations Industrial Development Organisation (UNIDO) Representative, Dr. Patrick Kormawa, paid him a courtesy call in his office in Abuja.
He noted that an additional 5,000 workers needed to be revalidated and commended the contributions of donor agencies in the ongoing privatization of the sector. “The exercise would have experienced more hiccups, but for the expertise, foresight and doggedness of these partners,” he said.
He described as critical the advice and support provided to all the arms of the power sector - regulatory, policy, executive, and technical - to ensure a seamless privatization exercise.
While calling for more collaboration from the international partners, he said their assistance in ensuring access to cheap fund for expansion of their capacities is urgently required.
Earlier, the UNIDO Representative, Dr. Patrick Kormawa, said the group which has the Minster of Power as its chairman, is focused on providing support for the sector.
Restating the activities of UNIDO, Kormawa stated that it is a platform for government and the donor groups to share knowledge, expertise and information on happenings in the power sector.

 

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PHCN Privatisation: ‘FG, Others May have Compromised on Standard Processes’

 

Prof Chinedu Nebo, Power Minister

By Chineme Okafor 

Stakeholders in the Nigeria’s electricity industry have described the ongoing power sector privatisation as a “pathway” and not a “door” to sustainable electricity supply market.

They argued that the expectations of incremental quality and quantity in electricity supply are dependent on the satisfaction of certain key conditions, which they said include respect for established electricity market rules; adherence to agreed key performance indicators (KPIs) and indeed sustained financial commitments to capacities expansion of privatised power generation and distribution assets by their new core owners.

They said with the overall objective of the federal government’s power sector privatisation as contained in the Electricity Power Sector Reform (EPSR) Act 2005, it is expected that the sale of successor generation and distribution companies created from the unbundling of defunct Power Holding Company of Nigeria (PHCN) should put Nigeria’s power sector on the pathway to efficiency.

Two industry players who spoke to THISDAY on the condition of anonymity posited that while the government had successfully selected preferred bidders and handed over the generation and distribution assets to the new investors, it cannot be said to have done that with absolute competitiveness and may have from this instance initiated patchiness that could in turn affect the progress of the sector.

They said the decision of the government through the National Council on Privatisation (NCP) to lower the standard processes and accommodate certain interests in the exercise meant that it had first of all compromised and allowed the acquisition of mostly PHCN distribution companies by investors that may be finding it difficult to now operate their assets.

 

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ECOWAS Countries to Learn from PHCN Privatisation

 

PHCN office

BPE: FG extremely magnanimous to demands of electricity workers

Chineme Okafor
Nigeria’s reform of her electricity industry which include the privatisation of successor generation and distribution companies created from the unbundling of the defunct Power Holding Company of Nigeria (PHCN) will serve as a learning curve for member countries of the Economic Community of West African States (ECOWAS), THISDAY has learnt.

Such level of interests on Nigeria’s electricity privatisation programme by ECOWAS member countries was shown yesterday at the consultative committee meeting of the fourth ECOWAS Regional Electricity Regulatory Authority (ERERA) currently holding in Banjul, capital of the Gambia.

Shortly before going into a closed door session, member countries of ERERA, which comprise electricity regulatory authorities of ECOWAS countries, including the Nigerian Electricity Regulatory Commission (NERC), indicated their willingness to learn from Nigeria’s privatisation experience especially in line with their aspirations to foster a competitive regional cross-border trade of electricity.

Discussions on minimum regulatory risk for all stakeholders in the electricity market, best contractual arrangements between operators in member states as well as transparency in cross border power trade are some of the issues that will dominate proceeding at the forum.

 

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Nigeria: NECA Warns of Looming Power Sector Industrial Unrest

 

Lagos — Nigeria Employers Consultative Association, NECA, yesterday, in Lagos, warned the Federal Government and new owners of Power Holding Company of Nigeria, PHCN, facilities of imminent industrial unrest in the power sector that would make the expected gains of the privatisation of power meaningless.

The umbrella body for employers in the country at a briefing on 'Promoting Industrial Harmony, Productivity and National Development in the Post-Reform Era of Power (Electricity) sector: Issues and Challenges,' insisted mere physical hand-over of facilities would not guarantee stable power supply, but all other variables, especially the issue of industrial relations, declaring that industrial crisis now would make meaningless the promises and prospects of the reforms in the sector.

Director General of NECA, Mr. Olusegun Oshinowo, who explained that the environment that would make the workers to give their best must be addressed.

He contended if the industrial relations practice and system in the electricity sector was not handled with professionalism and given utmost attention, it could frustrate whatever benefits anticipated in the new dispensation.

 

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Manpower shortage hits power sector, threatens privatisation

By Adeola Yusuf/Lagos

 

The privatisation of Nigeria’s power sector is under threat, following an indication of an impending acute manpower shortage in the power sector.

This came as the National Power Training Institute of Nigeria, NAPTIN said it is faced by 8,400 deficits in skilled manpower, which according to Reuben Okeke, its director-general, would rise to over 17,000 in four years.

Investigation by Daily Independent across the country showed noticeable shortfall in the commercial operation of the privatised distribution companies.

While some customers are yet to be served the bills for power consumed in October, others complained of a drastic fall in power supply to their area, as only a few now enjoy supply.

Following the takeover of the various facilities on November 1, by the new owners, over 60 per cent of the workforce manning the privatised former Power Holding Company of Nigeria assets was sacked.

The BPE had on Monday November 4, issued sack letters dated October 21 to the workers in a move to perfect the privatisation of the PHCN

 

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Privatisation does not include NIPP facilities-NDPHC boss

 

Following the successful transition from the old PHCN to new investors taking over the PHCN successor companies, it is apparently clear that the new owners would want to maximize profit. In this interview with TUNDE DODONDAWA, the Managing Director, Niger Delta Power Holding Company (NDPHC), Mr James Olotu, explained that what the new owners bought did not include NIPP facilities belonging to the NDPHC. Excerpts:

HOW do you intend to work with the new owners of privatised electricity firms?
 After the handing over of privatised companies to new owners, we decided to work together to achieve the transformation agenda of Mr President for the power sector by driving away darkness and bringing light. We were at Eko Distribution (Disco) and met with the new owners, West Power and Gas Ltd and our discussions showed that they are people of integrity determined to improve power efficiency for Nigerians.

They are prepared to invest more by buying the right equipment that will ensure that power gets to the people. We are able to join hands with them to commission four power injection substations. Those four substations which are 105MVA were added to the sector. The 105 MVA will be about 90MW. Customers are already feeling the impacts.

We were in Magodo to commission an extension of an existing sub-station by adding 15 MVA transformers to that place and improving the upgrading of the equipment in the control room from the old to modern technology making it easy to operate them.

 

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Confusion trails sack of PHCN staff, payment of benefits

 

New, re-engaged staff on 6-month contractBY VICTOR AHIUMA-YOUNG & KUNLE KALAJAIYETHE confusion trailing the November 1 hand-over of Power Holding Company of Nigeria, PHCN, facilities to new owners deepened yesterday, as reports indicated that thousands of workers of the defunct PHCN have been sacked with many of them yet to get their severance benefits.The confusion that has led to erratic power supply across the country is also compounded by the fact that those who are being re-engaged are employed as casual workers on six months contract.Already, organised labour in the sector has petitioned the Federal Government over the sack of almost all the union officials and casualisation of new employment, urging the authorities concerned to reverse the perceived anti-labour policy or risk industrial action without notice.Investigations revealed that since the November 1 hand-over, not less than 60 percent of the entire workforce, including union officials, have been issued sack letters by the Bureau for Public Enterprises, BPE, based on a rationalisation list allegedly prepared by the former Minister of Power, Professor Barth Nnaji.While the hand-over was done on November 1, the sack letters being issued were dated October 21, ten days before the hand-over.Similarly, the re-engagement letters were dated on October 21, 2013,A sample of the letter read: “Following the reforms in the power sector and the privatisation of PHCN successor companies, we wish to inform you that Eko Electricity Distribution Company has approved your engagement (position withheld) on a contract basis for a period of six (6) months effective from November 1, 2013 to 30th April 2014.“The terms and conditions of service during the aforementioned period of your engagement are as set out in the attached contract.”‘Dead employees’ A labour leader, who confirmed this, said: “The irony of that list is that it contains names of dead workers and staff who have voluntarily retired.”On reports that about 60 percent of the workforce has been sacked, he said “they are just being hasty. You cannot sack 60 percent of the workers in one swoop. That is why there is confusion in the sector.

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Privatisation of power: More hurdles to cross

 

As drums are being rolled out to celebrate what ,easily has been described as one of the most transparent privatisation exercises in Africa, fresh facts are emerging that the successful handover of the unbundled assets of the defunct Power Holding Company of Nigeria (PHCN) to private investors  may not provide the immediate panacea to Nigerians who have been yearning for quality electricity supply in their homes and offices.

This is because the vital bridge needed to cross to the promised land is in a state of disrepair. While the issue of power generating plants and distributing companies have been tackled and are being put to rest, transmission, an indispensible link between the two, is being treated with kid gloves. Andy Nssien, Business Editor, and Obas Esiedesa, Snr.Reporter, Abuja, report.

 

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Handover of Gencos, Discos: Tasks ahead of power ministry

 

With the successful handover of the privatized generation and distribution companies in of the Power Holding Company of Nigeria (PHCN) successor companies to the core investors, there is a natural assumption that the duty of the ministry of power has lessened.

But the Minster, Professor Chinedu Nebo said there are a lot more to be done in the ministry to ensure smooth running of the transition and eventual stability of the electricity market.

Nebo said the ministry will begin to play oversight role as well as the role of sharpening the policies of government.

“At the Ministry of Power, we can begin to play oversight role. We will play the role of sharpening the policies of government, defining government policies and ensuring that these policies are implemented through the regulatory agency.

In addition, the ministry will continue to work to ensure that government will have a working and workable policy of first, rural electrification, renewable energy and thirdly, energy conservation. Federal Ministry of Power will also continue to champion the renewable energy sources, one of the most critical being the hydro.

The hydros were not privatised per say, they were concessioned, like Jebba, Shiroro, and Kainji hydro dams were all concessioned. They are not outright sales to the private sector.

 

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Power privatisation process faulty’

 

A Peoples  Democratic Party (PDP) chieftain, Dr Katchy Onojuju has criticised the ways and manners in which the assets of the Power Holding Company of Nigeria (PHCN) were privatised.

The Bureau of Public Enterprises (PBE) had just completed the first phase of PHCN privatisation, a development that resulted in the emergence of 14 power distribution and generation companies.

Ononoju, in a statement titled: ‘’ Power Assets Privitisation: Bending the Rules Is Dangerous ’’, said the process leading to the sales of the six generation companies and 11 distribution companies was not in order. He said the assets were privatised to satisfy the yearnings of members of the ruling party.

Ononuju said PDP is noted for bending the rules to satisfy certain powerful interests, even when their competence has been called to question.

He said the Bureau of Public Enterprises and National Council on Privitisation undermined its own rules in the case of Enugu Distribution Company and Sapele Generation Company, adding that the development was capable of eroding confidence in the entire exercise.

 

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‘Privatisation to raise electricity generation to 20,000mw by 2018’

• U.S. group commends Nigeria’s power sector reform

THE Bureau of Public Enterprises (BPE) has projected that the successful privatization of the Power Holding Company of Nigeria (PHCN) would increase the country’s electricity generation capacity to 20,000mw by 2018.

Besides, the United States Government’s Power Africa Initiative has commended the Federal Government for the successful hand over of the power companies to the private sector.

Director-General of Bureau of Public Enterprises (BPE), Benjamin Dikki made the power generation projection when members of the House of Representatives Committee on Power paid an oversight visit to the bureau recently in Abuja.

Represented by Kashim Ibrahim, who received the visiting committee members, Dikki said the target would be possible with private sector investment and managerial skills that would be injected into the sector by the purchasers of the successor companies.

Chairman of the House Committee on Power, Patrick Ikhariale, emphasised the need to ensure that Nigerians reap the benefits of the privatisation of the PHCN, especially in respect of the promises made by the successor companies.

He explained that over 70 per cent of the socio-economic challenges facing Nigerians were as a result of the poor performance of the power sector.

He reiterated that if the promises of a stable power sector with the privatisation of the successor companies are fulfilled, it would go a long way in addressing most of the challenges.

 

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Privatisation: Powers behind the new power companies

.....Who are they?
The take-over of the unbundled PHCN firms has generated issues as to the credibility of those behind the purchases and what they are expected to deliver in terms of capacity handling, stock of manpower and expertise, as well as quality service delivery across their areas of jurisdiction.
Local owners of the new power companies are mostly investors who had hitherto been fishing in unrelated business waters, with little or no technical knowledge of how these unbundled power firms operate. But checks showed that in all the cases, local investors have partnered with foreign partners with technical expertise in acquiring the plants and are relying on that expertise to turn the plants round.  
Owners of the generation companies are: Amperion Limited for Geregu I Genco, Transcorp/Woodrock for Ughelli plant, Mainstream Energy for the Kainji and Jebba generation company (Genco), North South Power for Shiroro plant, and NEDC/KEPCO alongside its local partner, Sahara Energy Resource Nigeria for the Egbin Genco.

Chief Femi Otedola, Chairman of Amperion Ltd, owner of Geregu I Genco is also the Chairman of Forte Oil, a major player in the nation’s oil and gas sector. Otedola is financing 57% of Amperion’s total equity. Its technical partners are BSG Resources Ltd with 38% and Shanghai Municipal Electric Power Company, 5%. Amperion purchased the PHCN firm for $132 million. It plans to jack up power generation at the Geregu plant to 600mw, a 50% increase, in the short-to-medium term.

 

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New owners of Nigeria’s electricity companies can abandon unwanted projects- Official

 

 

 

The new investors have been handed the licences of the PHCN successor companies.

The private owners of Nigeria’s electricity companies would not inherit unwanted liabilities, Beks Dagogo-Jacks, the Chairman of the Presidential Task Force on Power, said, at the inaugural Nigeria Power Investors Summit which began in Lagos on Monday.

Mr. Dagogo-Jacks said for power projects already in the pipeline, the new investors would perform due diligence and make decisions on the best options for them. According to him, the elements and factors that would be considered on such projects would be strictly business driven.

“All projects which do not meet up with the decisions based on the due diligence would be transferred to the liability management company. Invoices not paid and projects not of value to the new owners of the companies would also be migrated to the liability management company,” he said.

Mr. Dagogo-Jacks said the privatisation process is still at the pre-transitional market stage, and has two stages to go. According to him, among the milestones expected are the commercialisation and privatisation of the successor companies, as well as the creation of a holding company, among others.

He said the nation’s Transitional Electricity Market when announced, would further set the stage for progress in the process. “By that time, most of the issues would have been addressed” he said.

 

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