FG To Pocket N1.33trn From Sale Of PHCN


The Federal Government will earn about $8.3 billion (N1.328 trillion) from the sale of the unbundled power generation and distribution companies of the Power Holding Company of Nigeria, PHCN, according to the National Council on Privatisation, NCP.

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Part of the money, according to NCP, will also be derived from the sale of the 10 new power plants being built by the Niger Delta Power Holding Company Limited, NDPHC.

Speaking at a special forum on, “Financing the Power Sector Reforms for Economic Development,” organised by the Bankers’ Committee in Abuja, Chairman, Technical Committee of the NCP, Mr. Atedo Peterside, said the new owners of the PHCN assets are expected to invest about N300 billion in Nigeria for the provision of 6.52 million electricity meters and other capital expenditures.

“For the Discos, some very significant investments will also be required to improve efficiencies and reduce Aggregate, Technical Commercial and Collection Losses. Based on the proposals submitted by the core investors, new meters will be installed over the course of the next five years as follows:-

“At an estimated weighted average cost (purchase and installation) of N25, 000 per meter, this amounts to over N150bn. “The bulk of this should be recoverable from the consumer, but then the distribution infrastructure also needs to be modernised and expanded to achieve greater coverage. The 11 Discos are projecting annual capital expenditures in the region of N60 billion per annum for each of the next five years,” Peterside said.

He added that a grand total of approximately $3.3bn (N528 billion) should accrue to the Federal Government’s coffers from the PHCN Genco and Disco transactions.

He further stated that at a crude estimate of $1.2 million per mega watt, the sale of the Federal Government’s 80 per cent equity stake to core investors will raise close to $5 billion (N800 billion), expressing optimism that about 70 per cent of the amount will be financed in 2014 largely through debt/loan instruments provided by Nigerian banks.

Peterside disclosed that the new owners of the power generating and distribution companies will need to make investments of about $4.28 billion (N684.8 billion) to boost the country’s power supply by an additional 4,284.4 mega watts.

“The nine PHCN Gencos, including Omotosho and Olorunsogo, only had available capacity of 2,692 MW as at 10th Sept. 2013, as against a total installed capacity of 6,976.40 MW.

“Financing the necessary capital expenditure (capex) to fund this incremental 4,284.4 MW that is required to achieve full capacity, crudely estimated at $1m per MW approximately, will cost an additional $4.28bn.” he said.

He conceded that there are still some unfinished businesses in the privatisation of the assets of the PHCN, calling for concerted efforts to ensure the success of the exercise.

He said, “I must emphasis that there is still some “unfinished business” with the privatisation of the Power Holding Company of Nigeria (PHCN) Successor Companies and so, like accomplished sportsmen, I believe we must stay focused and not take our eyes off the ball until the game is truly over.

“However, it is pertinent to remember that this is really the beginning of a journey and not the end of a journey as some have mistaken it to be. As we all know, the purpose of privatising the Discos and Gencos was not just to transfer ownership of the assets. The primary purpose was to bring into play new owners with deep pockets who could finance and/or access financing for the rapid restoration of lost capacity and/or add significant new capacity to make up for decades of Government neglect and mismanagement.”

Continuing, Peterside said, “In my opinion, FGN should also continue to offer a safety net by subsidising the tariffs for the poorest consumers, that is, the R1 and R2 customers. [Vanguard]

Babatunde Akinsola
Babatunde Akinsolahttps://naija247news.com
Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports

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