19 firms express interest in Afam Power, Yola Disco

The Bureau of Public Enterprises (BPE) has intensifies plans to sell Afam Power Company and the Yola Distribution Company (YDC) as 19 firms have expressed interest in acquiring the two corporation put up for sale by the federal government.

At the close of the submission of bids for the Expression of Interest (EOIs) for the two power companies, seven companies submitted bids to buy Afam Power Company while twelve submitted for the Yola Disco.

The Head, Public Communications of the Bureau of Public Enterprises (BPE), Amina Tukur in a statement shortly after the 1 pm deadline for the submission of EoIs for the two companies on Tuesday, September 26, 2018, said among the companies that bid are renowned players in the power industry.

“The Evaluation Committee earlier set up by the Bureau to scrutinize the bids was immediately after the expiry of the deadline, inaugurated by the Bureau’s Director of Energy, Yunana Malo to commence work,” Tukur said.

Stakeholders in the power sector have said it is improper for the federal government to put Yola Electric Distribution Company up for sale, given that it is performing better than most of the other Discos that are privatised.

They wondered if the real value of the Disco would be realised if it is sold now in view of the fact that the circumstances that made the core investor to return the Disco back to the government which is insecurity is still very much prevalent.

It would be recalled that although Yola Distribution Company was successfully privatized and handed over to the core investor in 2013, a force majeure was declared in 2015 by the core investor citing insecurity in the North-East region of the country.

According to some stakeholders who spoke to BusinessDay, the Boko Haram insurgency is big challenge to any investor as it’s seems intensified even though the government claimed that the group has been technically defeated. They also cited the problems of the Fulani herdsmen another major factor threatening investments in that region.

The fulanis herdsmen problem has led to displacement of a number of people in Taraba and Adamawa States which were considered as relatively peaceful before now. They said it would be difficult for any investor to want stake his money on the company given the level of uncertainty prevailing in the areas covered by the distribution company.

A former managing director of Ikeja electric once told BusinessDay, “It is crazy to want to sell Yola Disco now considering the performance of the sold ones. Presently Yola is performing better than most Discos despite the fact that it is still being run by civil servants. If the government had given the old management a third of the over N1 trillion Naira intervention fund it has pumped into the system since privatisation could country would have been singing a different song.”

Another executive director of one of the Discos queried the rationale behind the government selling the asset while she still owing the former core investors and described the action of the government capable causing disincentive to other investors.

“Whoever wants to buy the asset must be seeing what others are not seeing, I only hope that they do proper due diligent before throwing themselves into it,” he said.

The transaction for Afam Power Generation Company on the other hand fell through due to the delay in signing the Gas Supply Agreement (GSAA) and the Gas Transportation Agreement (GTA).

In 2017 the National council on Privatization (NCP) gave approval for a fresh transaction to privatize the two power companies.