Power firms: BPE pre-qualifies US, Japanese, Korean firms

Another milestone in the quest for stable electricity supply in the country is about being reached with the pre-qualification of some reputable international companies to bid for the 17 power firms put up for sale by the government, MARTIN AYANKOLA unveils some of the successful companies

As the process of selling key power firms approaches the homestretch, some reputable international energy companies have been pre-qualified to bid for 17 successor companies of the Power Holding Company of Nigeria being offered by the Federal Government.

Our correspondent gathered that a top Japanese electricity company, Marubeni Corporation, the Korean Electric Power Corporation, China’s KEPCO and United States’ AES Corporation, are among the consortiums pre-qualified to bid for the power firms.

Although the list of pre-qualified bidders has not been released by the Bureau of Public Enterprises, our correspondent gathered from top sources close to the screening process that the three companies were among top contenders.

“I can tell you that top Japanese, Korean, Chinese and American companies are among the consortiums selected to bid for the power firms. Some of the companies that have cleared the screening hurdle include Marubeni Hitachi, AES and KEPCO,” the source, who asked not to be named because the official list had not been released, told our correspondent.

“We have major power companies worldwide represented on the list,” he added.

Marubeni Corporation has a strong presence in the electricity business worldwide and currently generates 7.5 gigawatts, which is about 7,500 megawatts of electricity. It handled the construction of the Egbin Power Station, Lagos, which is the biggest power plant in the country with an installed capacity of 1,320MW.

The Korean Electric Power Corporation currently generates 53,907MW worldwide. It had earlier bid for the Egbin plant and won but could not take over because the government was fine-tuning the terms of agreement for the takeover.

Because of this arrangement, the Egbin plant is not part of the firms being offered for sale.

AES Corporation, currently generating about 270MW of electricity from barges at the premises of the Egbin Power Plc (the power generating station), operates over 132 power stations worldwide.

The three companies were said to have expressed interest in some power generating and distribution firms being offered for sale by the government.

The BPE had set up a committee to determine the companies that met the criteria set for participating in bidding for the 17 companies with its membership drawn from several government organisations, including the Nigerian Electricity Regulatory Commission.

Our correspondent gathered that the shortlist of successful companies to have expressed interest in bidding for the power firms was ready and awaiting the approval of Vice-President Namadi Sambo, who is the Chairman of the National Council on Privatisation.

“We have finished our work and the list has been submitted and what is probably delaying the release of the list is the election. Once it is over, I am sure the list will be made public,” the source said.

Investors who meet the requirements will be pre-qualified and invited to submit Request for Proposals that will state their technical and financial bids.

Potential bidders, according to BPE, should be existing power distribution companies or core investor groups with power distribution companies as long-term technical partners.

Pre-qualified bidders will then be allowed access to the electronic data room to examine relevant data on the successor companies, according to the Director-General, BPE, Ms. Bolanle Onagoruwa.

The BPE had between December 13 and 20, 2010, published adverts in local and foreign media inviting prospective core investors to express interest in the eleven distribution companies unbundled from PHCN.

The privatisation agency had also invited prospective core investors to express interest in the four thermal power stations and concessionaires for the two hydro power stations. The initial deadline for the receipt of the EOIs was Friday, February 18, 2011. But following representations by prospective investors, who attended the five-city Electric Power Investors’ Forum meant to court world-class investors to participate in the privatisation of the companies, the Federal Government approved an extension of the deadline for the submission of the EOIs to Friday, March 4, 2011.

The BPE said on April 13 that it would release the list of selected bidders for the firms in three weeks.

Onagoruwa had said, “Over the next three weeks, we should have the results of who the short-listed bidders are before we then go to the actual submission of technical and financial proposals.”

She told journalists that successful companies would be chosen for the six power stations and 11 distribution firms on their ability to reduce transmission losses in the network.

The agency had received 174 EOIs for the four thermal and two hydro power stations, and 157 for the 11 distribution firms, with investors expected to be allowed to take stakes of up to 51 per cent.

Some industry executives said they were reluctant to make final commitments until the outcomes of the elections were clear and Nigeria was able to implement a solid regulatory framework to govern the sector.

“We basically said to them that the process has been designed in such a way that they don’t have to pay their money until they have a clear idea of what the next government will do. So, that gives them some confidence. They can start due diligence,” Onagoruwa said.

The companies to be sold are the Abuja Electricity Distribution Company Plc, Benin Electricity Distribution Company Plc, Enugu Electricity Distribution Company Plc, Eko Electricity Distribution Company Plc, Ibadan Electricity Distribution Company Plc, and Ikeja Electricity Distribution Company Plc.

Others are Jos Electricity Distribution Company Plc, Kaduna Electricity Distribution Company Plc, Kano Electricity Distribution Company Plc, Port Harcourt Electricity Distribution Company Plc, and Yola Electricity Distribution Company Plc.