POWER PRIVATISATION: BPE RELEASES TRANSACTION AGREEMENTS
By Clara Nwachukwu
The Bureau of Public Enterprises, BPE has released the revised industry and transaction agreements to the 152 potential investors interested in the privatisation of the 17 successor companies created from the unbundling of the Power Holding Company of Nigeria, PHCN.
There were 13 of such agreements, which the BPE said it sent to the bidders on Friday, March 30, 2012, while also calling for their comments and observations on them before April 20th.
The Bureau said it would publish the final transaction and industry agreements on May 11, and warned that it would not entertain any further observations on them, thereafter.
In a letter to the bidders, the Acting Director of Electric Power, BPE, Mallam Ibrahim Babagana, said that 'as per the timetable issued to you, we expect to receive all comments on these documents by April 20, 2012 at the latest.'
He added, 'We commit to provide to you the final version of the transaction and industry documents by May 11, 2012. After this date, further modifications to any documents will not be accepted.'
In a statement from the BPE the transaction documents concern a number of agreements including: Share Sale Agreement; Shareholders Agreement; Performance Agreement; and Concession Agreement.
The industry documents are: Gas Sale and Aggregation Agreement; Gas Transportation Agreement; Bulk Power Purchase Agreement (Thermal); Bulk Power Purchase Agreement (Hydro); Vesting Contract; Transmission Use of System Agreement; Grid Connection Agreement; and Ancillary Services Agreement.
At a recent Commonwealth Summit in London, the Partner, CPCS Transcom, Mr. Arif Mohiuddin, a consultant engaged by the Federal Government on power privatisation, disclosed that in drafting the agreements, government tries to ensure that the projects finance are based on international best practice.
'We are careful about the bankability of the projects, and the big finance institutions have identified all the risks associated with the agreements and have tried to ensure that the bankable projects are spread.'
With regard the value chain agreements, his team is working towards allocating risks and agreements and would harmonise them with the investors' comments.
He also said that over 700 professional bids were originally received before they were pruned down to 152, and expressed the 'hope to conclude the entire transaction by the end of the year.'
It would be recalled that following the bidder feedback received by the privatisation agency on the industry and transaction structure, a legal retreat was organised by BPE in Enugu between November 29 and 31, 2011, which involved key stakeholders in the power sector.
According to Babagana, 'Out of the retreat, agreements were made and the way forward was established in working to address the comments the bidders made on the documents. The revised industry and transaction agreements are the products of extensive review process and working with all key stakeholders responsible for the various industry documents.'