Core investors in PHCN assets won't be allowed to bid for NIPPs, says NERC
All those who already core investors of the successor generation and distribution companies will not be allowed to participate in the bid for the National Integrated Power Projects (NIPP), according to the Nigerian Electricity Regulatory Commission (NERC).
NERC said its position on the matter was in line with its commitment to prevent oligopoly and market rigging in the emerging power sector.
The rule is aimed at expanding the number of players in the sector to foster better competition, it said.
According to the regulator, no core investor or dominant player will be allowed to buy the assets put on sale by Niger Delta Power Holding Company (NDPHC). Only minority investors like institutional investors such as the Africa Finance Corporation, who are themselves subject to regulation can participate.
Sam Amadi, chairman, NERC, said: 'We want to make the market competitive. We also want to ensure that nobody can have more than one plant.'
'As long as the government's intentions are hinged around transparency and accountability, the government should facilitate more private sector investments in the energy sector at the national and local levels for the purposes of diversification,' said Ademola Oshodi, project manager, Nigerian Natural Resource Charter.
Already, the six PHCN successor generation companies (Gencos) are currently being sold to private investors. Bidders for five of the plants have paid up the 75 percent balance of the bid price. The Gencos include Egbin Power plc, Kainji Hydro Electric plc, Sapele Power plc, Shiroro Hydro Electric plc, and Ughelli Power plc.
The NIPP generation portfolio comprises 10 gas-fired power plants with a combined design capacity in excess of 5,453 megawatts (mw) at ISO conditions and 4,774mw (net) with each of the power plants incorporated as a subsidiary company of NDPHC.
Analysts have said that the ideal number of players in the electricity generation business should be about 25, stressing the need to ensure that no one single entity is responsible for generating more than 10 to 15 percent of total generated power in the country.
They note that there is need to keep constant watch to prevent unholy mergers, adding that over the years good business practice will set out the effective players.
'If they want to raise capacity, let them do it with the assets they have already purchased. No question of right of first refusal just because you bought a PHCN asset and a nearby NDPHC asset is being offered for sale,' said one analyst.
NDPHC, owner of the NIPPs, recently announced the decision to sell 80 percent in the 10 power plants, which was informed by government's intention to involve private sector operators who have the technical know-how to run the plants in an efficient manner.
The 10 generation plants include Gbarain (225mw), Ihovbor (450mw), Omotosho (500mw), Egbema (338mw), Omoku (250mw), Geregu (434mw), Calabar (561mw), Ogorode (Sapele 450mw), Alaoji (1,074mw), and Olorunsogo (750mw).
Not a few investors have been scrambling for the power plants in what is the second wave of the privatisation of power assets in the country. Over 386 firms were said to have been short-listed for the sale of 10 plants.