Nigeria hands over PHCN GENCOs, DISCOs to new owners today

A total of approximately $3.3 billion is to accrue to the Federal Government coffers as proceeds from the sale of the five Generation (GENCOs) and ten Distribution (DISCOs) companies, whose assets are being transferred to the core investors today.

However, out of the sum about $2.137 billion has been realised from the transactions.

It would be recalled that the Power Holding Company of Nigeria (PHCN) was unbundled into 15 successor companies comprising five generation companies (GENCOs) and 10 distribution companies (DISCOs).

The National Council on Privatisation (NCP) recently ratified the sale of the 10 DISCOs and four of the five GENCOs to preferred bidders which made full payments for the assets.

The council had said that it did not ratify the sale of Sapele GENCO because the preferred bidder did not pay in full for the asset.

Giving an update on the power sector privatisation process at the weekend, Atedo Peterside, chairman, technical committee, National Council on Privatisation (NCP), announced that by August 21, 2013 payment deadline, the private sector core investors had paid a total of $1.13 billion for 60 percent equity controlling stakes in nine DISCOs. These include Abuja, Benin, Eko, Ibadan, Ikeja, Jos, Kaduna, Port Harcourt, and Yola.

Peterside was speaking in Abuja at a special forum on ‘Financing the power sector reforms for economic development’ sponsored by the Nigerian banks and supported by the Central Bank of Nigeria (CBN).

The core investor for Enugu paid its $126 million bidding price late and as such the NCP directed that they must pay a late penalty fee which is equal to libor +5 percent for the number of days for which they were in default, Peterside said.

He noted that the preferred bidder for Kaduna which had a separate time table is expected to pay a total of $163 million within six months, thereby completing the $1.419 billion, that was originally targeted for the sale of all the DISCOs.

For the GENCOs, a total of $1.077 billion was received from the core investors as at the same August payment deadline for equity stake ranging between 51 percent and 100 percent in four GENCOs, namely, Egbin, Geregu, Kainji and Ughelli.

But the core investor for the fifth GENCO, Shiroro, completed its payment of $111. 6 million a few days late and will also pay a late penalty fee equal to libor +5 percent for the number of days for which they were in default, Peterside also informed.

 Meanwhile, the preferred bidder for Afam is expected to pay a total of $260 million within six months based on a different timetable. He explained that for Sapele, the preferred bidders are still in default, as they only paid approximately $120 million out of the $201 million that they promised to pay by the deadline.