President Goodluck Jonathan signed deals on Monday handing over state electricity assets to 15 bidding companies, a milestone in a privatisation process meant to end decades of power blackouts.
The handover in a ceremony at the presidential residence came a month after the bidders for 10 generation companies and five distribution companies paid deposits of 25 percent of the value of their bids.
The Power Holding Company of Nigeria (PHCN) is being broken up into 15 firms handling generation or distribution in different parts of the country; with the aim of doing something no Nigerian president has managed for decades: switching the lights on.
Despite being Africa’s top energy producer with the world’s seventh largest gas reserves, Nigeria produces and distributes only enough power for a few hours a day in the places that get it at all.
Economists say power outages cost Nigeria billions of dollars on imported diesel for generators and in lost output. They say current GDP growth of around 7 percent could be pushed into double figures if electricity supply could be sorted out.
Power output is currently about 4,000 megawatts for a country of 170 million people.
“Today’s event signals a major step forward in the implementation of our power sector road map,” President Jonathan said. “I congratulate the signing parties for reaching this significant target in our collective efforts to revitalize this sector, which is so important to our lives and development.”
Previous state sell-offs in Nigeria were blighted by political infighting and graft, which have caused years of delays. Regulators say this process was more transparent. Although it has appeared to favour established Nigerian oligarchs, some of them with scant experience of operating power companies, most have teamed up with capable technical partners like Siemens.
World Bank officials also signed a credit risk guarantee on a loan from Deutsche Bank’s U.S. subsidiary to finance gas supplies to the 1,320 megawatt Egbin Power Plant, which is based outside Nigeria’s commercial-hub Lagos, and of which Korea’s KEPCO was offered a 70 percent stake this month.