2013: Privatisation To Lift Government’s Revenue By $2.24bn

2013: Privatisation To Lift Government’s Revenue By $2.24bn

Privatisation is set to boost the nation’s revenue profile in the 2013 fiscal year by a minimum of $2.42bn, EVEREST AMAEFULE writes.

The Federal Government is expected to make a minimum of $2.5bn (about N51.68bn) from the ongoing privatisation transactions this year.

The bulk of the money will come from the sale of companies carved out of the Power Holding Company of Nigeria.

Already, the potential core investors in 15 of the successor power companies had paid $559.45m into the coffers of Federal Government by Thursday last week.

The amount represents only 25 per cent of the total sum, which the Federal Government is expecting from the sale of the 15 power companies.

The potential core investors are expected to pay another $1.68bn within the nex six months.

This amount, which will take the privatisation proceeds from the 15 companies to $2.24bn, represents 75 per cent of the expected proceeds.

The BPE, on March 21, 2013, received $31m from 4Power Consortium; being the mandatory 25 per cent of the bid value for the Port Harcourt Distribution Company; $31.5m from Interstate Electrics Limited; being the mandatory 25 per cent of the bid value for Enugu Distribution Company; and $27.9m from North-South Power Company, being the mandatory 25 per cent of the bid value for Shiroro Power Plc.

Earlier, Vigeo Consortium, the preferred bidder for the Benin Distribution Company, had paid $32.25m; Transcorp/Woodrock Consortium, the preferred bidder for Ughelli Power Plc, paid $75m; and CMEC/EUAFRIC Energy JV, the preferred bidder for Sapele Power Plc, paid $50.2m.

Also, Kann Consortium, the preferred bidder for Abuja Distribution Company, paid $41m; Aura Energy, the preferred bidder for Jos Distribution Company, paid $20.46m; Mainstream Energy Limited, the preferred bidder for Kainji Power Plc, paid $59.47m; and Sahelian Power SPV, the preferred bidder for Kano Distribution Company, paid $34.25m.

Others are Amperion Power Company Limited, the preferred bidder for Geregu Power Plc, which paid $33m; Integrated Energy Distribution and Marketing Company, the preferred bidder for Ibadan and Yola Distribution Companies, which paid $42.25m and $14.75m for the two firms, respectively.

Also, NEDC/KEPCO, the preferred bidder for the Ikeja Distribution Company, paid $32.75m; and West Power & Gas, the preferred bidder for Eko Distribution Company, paid $33.75m.

Following the approval of the National Council on Privatisation chaired by Vice-President Namadi Sambo, the preferred bidders paid a total of $335.85m, which the transaction process required them to pay as bid guarantees.

For the Abuja Distribution Company, Kann Consortium paid $24.6m; for Benin Disco, Vigeo Power Consortium paid $19.35m; for Eko Disco, West Power and Gas paid $20.25m; for Enugu Disco, Interstate Electrics Limited paid $18.9m; while for Ibadan Disco, Integrated Energy Distribution and Marketing Limited paid $25.35m.

The NEDC/KEPCO Consortium paid $19.65m for Ikeja Disco; Aura Energy Limited paid $12.3m for Jos Disco; Sahelian Power Limited paid $20.55m for Kano Disco; 4Power Consortium paid $18.64m for Port Harcourt Disco; while Integrated Energy Distribution and Marketing Limited paid $8.89m for Yola Disco.

For the power generation companies, North-South Power Limited paid $16.75m for Shiroro Hydro Power Plc; Mainstream Energy Solutions paid $35.68m for Kainji Hydro Power Plc; CMEC/EURAFRIC Energy Limited paid $30.15m for Sapele Power Plc; Amperion Power Distribution Limited paid $19.8m for Geregu Power Plc; while the Transcorp Consortium paid $45m for Ughelli Power Plc.

The bid guarantees are expected to be returned to the core investors when they must have made the final payments for the successor companies.

Apart from the 15 successor companies, whose preferred bidders have emerged, a total of 49 firms are currently jostling to acquire majority ownership in two other electricity firms carved out of Afam Power Plc and Kaduna Distribution Company Plc.

At the January 31, 2013 deadline for the receipt of Expressions of Interest from prospective bidders for the two firms, BPE had received 19 applications for Kaduna Disco and 30 for Afam power plant.

Afam Power and Kaduna Electricity Distribution Company were among the 17 PHCN successor companies that were earlier advertised for sale in December 2010. And they, along with the others, went through a tender process which culminated in the submission of technical and financial proposals in July 2012.

However, none of the bids received for both firms scored the minimum 75 per cent required to progress to the financial bid stage.

This compelled the NCP to order a re-run of the entire transaction.

Apart from the power firms, another privatisation transaction that is expected to bring money into the government’s coffers is the liquidation of the Nigerian Telecommunications Limited.

The Head of Public Communications, BPE, Mr. Chigbo Anichebe, confirmed that NITEL would soon be put into the market through the process of liquidation.

The funds to be realised from the transactions may only ensure that the government does not spend money from other sources in settling the liabilities of both PHCN and NITEL.

Anichebe said the transaction costs to be settled after the sale of the PHCN successor companies included the cost of severance package for the workers and other labour issues, which had been put at N384bn.

The money to be realised from the liquidation of NITEL may also go into the settlement of the indebtedness of the company when it was a going concern, as the government has already borne the brunt of paying the labour related expenses.

Incidentally, the Federal Government did not indicate that it was expecting any money from the process of privatisation. The nation’s Medium Term Expenditure Framework prepared by the Budget Office showed that N10bn was expected from privatisation in 2012.

However, it showed that from 2013 to 2015, the Federal Government would not get anything from privatisation transactions.

The Director-General, Budget Office, Dr. Bright Okogu, could not be reached for explanation as he neither picked calls to his telephone line nor replied to text messages seeking explanation for the absence of privatisation transactions in the government’s revenue profile for the year.

Source: Legit.ng

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