How Unreliable Gas Supply Stalled Privatization Of Power Projects-BPE



The Director General of the Bureau of Public Enterprises (BPE), Mr. Benjamin Dikki, has clarified that the on-going privatization of the National Integrated Power Project (NIPP) power plants was not stalled because of politics but that the delay was occasioned by the problems of gas supply that has stalled the signing of the gas agreements that will make the transaction bankable. He stated that concerted efforts were being made to secure reliable gas supply that will enable the signing of the gas agreements.
He made the clarification at a panel discussion, “Making the Power Sector Privatization Work in a Privatized Environment” organized by the Business Day newspapers, last week in Lagos.
The DG noted that the privatization program was anchored on the attainment of clearly defined goals and parameters, adding that in the case of the generation companies, capacity is expected to be ramped up from the current low levels to those that meet the minimum target capacities specified under the respective business plans submitted by the core investors.
For the distribution companies, he said the performance of the business operations of the new owners would be measured on the basis of their abilities to reduce the Aggregate Technical, Commercial and Collection (ATC&C) loss targets specified in their business plans.
The BPE boss further enumerated the key objectives of the reform and privatization of the power sector, amongst which is “to reduce the cost of doing business in Nigeria so as to attract new investments through the provision of quality and dependable power supply, which is necessary to grow the economy through industrial, commercial and socio-domestic activities.” Others, he said, are:
“To provide Nigerians with basic and affordable electricity infrastructure; a key to enabling them create employment for themselves;
To create a robust commercial, competitive and sustainable electricity market that is private sector driven;
“To inject private sector managerial expertise and capital into the sector; and
“To reduce government expenditure in the sector and redirect savings to other sectors to meet government’s social responsibilities to its citizenry.
The Director General projected that the capital expenditure (Capex) needs of the eleven distribution companies would be around $1.8 billion in the next five years – an average of about $360 million per annum.
The DG however noted that the power sector generally would require billions of dollars of expenditure over the next five years and this expenditure is needed in order to achieve the goals of the electric power reform program.
He added that the BPE has ensured that the purchasers are contractually obligated to make investments, adding that the Federal Government (through the BPE and Nigerian Electricity Regulatory Commission) would monitor the implementation of these requirements closely and continuously.