FG hands over Olorunsogo Power to new owner
The Federal Government has has formally handed over Olorunsogo Power Plc to SEPCO Pacific Partners Ltd, bringing to 16, the total number of power assets handed over to the private sector in the last four months.
The Chairman of National Council on Privatization, NCP, and Vice President, Arc. Mohammed Namadi Sambo noted at the handing over ceremony that since the passage of Electric Power Sector Reform Act, EPSRA, 2005 and the unbundling of NEPA into 18 successor companies, very little was done to advance the reform of the Power Sector until the coming into Power of President Goodluck Jonathan led to the enunciation of the Transformation Agenda of the nation's economy.
Arch. Sambo who was represented by the Director General of the Bureau of Public Enterprises, BPE, Mr. Benjamin Dikki said the reform and privatization program would not have been possible without the leadership, unparalleled support and commitment of president Jonathan and his team in the NCP, Presidential Taskforce on Power and Presidential Action Committee on Power to the roadmap.
He added that that the provision of stable power remained imperative to drive the economic transformation of Nigeria. He noted that, 'It was the realization that Nigeria will not attain the desired economic growth without adequate power that informed the power sector reform.'
In previewing the history of the reforms in the Nigeria electricity Supply Industry, Sambo said, 'Reform in this very critical sector commenced in 1999, with the inauguration of the Electric Power Implementation Committee, EPIC.'
He said this 'culminated in the development of the National Electric Power Policy 2001, the enactment of the Electricity Power Sector Reform Act 2005, and establishment of Power Holding Company of Nigeria, PHCN, to facilitate the repeal of the now defunct NEPA Act.
'The new Act gave rise to the creation of 18 successor companies from the unbundled PHCN in three categories, viz; Generation (six companies); Transmission (one company); and Distribution, 11 companies.'
The VP noted that reform was a necessary tool for laying a solid foundation for sustainable power generation and service efficiency in the sector and the privatization of the sector was a key component of the reform and a pre-condition for the start of a competitive electricity market in Nigeria.
He hopes that the 'participation of the private sector would bring about higher generation capacities through the provision of more efficient and cost effective power stations and improvements in electric power distribution, in the areas of billing and collection, transmission networks, etc'
He noted that such capital injection and efficiency have been inadequate in PHCN over the years, resulting in gross inadequate power supply with the attendant negative effects on the citizenry and the economy at large.
The Vice President pointed out that the Transformation Agenda of the present administration seeks to continue to open up other sectors of the economy to private sector investments, adding that this would free government resources for the provision of social services to the Nigerian people.
Sambo further assured there was hope that 'Nigeria will rise and shine brightly very, very soon'.
You may recall that the Phase 1 of Olorunsogo Power Plant which has a capacity of 335MW was constructed between 2002 and 2007 at the cost of $US167,291,674.76. The Federal Government of Nigeria (FGN) funded 35% of the cost while the balance of 65% was financed through vendor financing provided by SEPCO at the interest rate of 6% per annum.
It was conceived initially in the contract and terms of the agreement that the power project, after completion, would operate commercially and the proceeds from the sales of electricity will be used for the repayment of the vendor financing and interest payment.
However, the delay in the completion period coupled with limitation in gas supply and paucity of funds at PHCN resulted to default in the payment of the debt and accumulation of unpaid invoices to SEPCO. This debt was finally taken over by the Debt Management Office (DMO).
In 2010 however, President Jonathan approved that the BPE proceeds with the proposed divestiture of Federal Government shares in the plant, resulting in the Bureau commencing negotiations with SEPCO-Pacific to convert the project finance debt to equity and resolve the financial commitment of FGN.
Earlier in his remarks, the Chairman of SEPCO-Pacific, Dr. Adedeji Adeleke noted that Olorunsogo Power Plc was SEPCO's first venture outside China, but has since built over 10,000 mega watts of power in India, Iran and Saudi Arabia. He reiterated the belief of SEPCO-Pacific in Nigeria economy.
Dr. Adeleke poured encomiums on the staff of BPE, adding: 'I have not met a crop of individuals that are as committed, as straight forward as BPE staff'. He noted that it was the commitment and transparency exhibited by the BPE that led to the success of Federal Government power reform and privatization program, despite all the challenges encountered.
The DG, BPE on his part emphasized that both the Nigerian Electricity Regulatory Commission and the BPE will continually monitor the operations of the successor companies and would not hesitate to sanction any core investor that does not deliver on the performance agreement that was executed with the Government.