•11 distribution companies, 7 others to be sold
•FG to provide N200 billion for labour related liabilities
In what will be seen by local and international investors as a radical shake up of its energy policy, Nigeria is now working at delivering a full-fledged private sector led power industry by June 2011.
The policy shift appears to be a key deliverable that the present administration in Abuja, which has barely a year to run, would want to hand over to Nigerians before it comes to an end after elections scheduled for between later this year and early next year.
"Expect the full privatisation of the 11 distribution companies, one transmission company and the six generation companies. In other words, by June next year, we expect to be handing over these companies and consequently the power sector to private investors," said one senior government source close to the engine room of the policy formulation now taking place.
A draft work plan is said to have been prepared with June, next year, as its destination. A public unfolding of the plan is not likely to happen, as serious work is being done internally to perfect all areas so as to avoid loopholes, it was learnt.
Involved in working out a comprehensive framework that will free the sector from decades of government stranglehold and deterioration, are the powerful power task force set up by President Goodluck Jonathan, led by Massachusetts Institute of Science and Technology robotics professor, Barth Nnaji, and the Bureau of Public Enterprises (BPE).
The Barth Nnaji-led Power Task Force, only a few weeks old, is working on the technical details to ensure the tidying up of the intricacies that have helped keep Africa's second biggest economy in darkness, and unable to supply 40 watts of electricity for a full day to its citizens for decades.
BPE, which has been involved for years in selling state-owned, non performing companies, will have the responsibility to pass control of the power industry from the Federal Government by selling off all the viable assets to private investors across the world.
The plan to make the industry attractive to investors involves ensuring that only assets, not liabilities, in the power industry are put up for sale. Sources at the Presidency and the BPE say that the Nigerian Electricity Liability Management Company (NELMCO) will take up all the liabilities of the existing power companies functioning in the mode of the Asset Management Company of Nigeria (AMCON) set up by the Central Bank of Nigeria to address toxic assets and other challenges in the banking sector.
The liabilities to be taken over by NELMCO include stranded debts (unfunded debts) that are made up of bank loans, taxes, debt to contractors, power purchase agreements with AES, Shell (for Afam VI), and Agip (for Okpai). But it will also handle other legacy issues, thus freeing up the sector for the emergence of a private sector controlled power industry.
"An order will first be made by Vice President Namadi Sambo, for the transfer of all the liabilities to NELMCO, and then this process will commence. This has not happened yet," said a high ranking BPE official.
But the Jonathan administration is underscoring its commitment to the process by removing all labour related liabilities from the balance sheet of the companies, to make them even more attractive to investors. Indeed, the Federal Government has already set aside N200 billion to tackle all issues concerning labour, and that negotiations with organised labour will be held to pave the way for smooth privatisation.
The full privatisation of the sector will also be based on working out a new Multi Year Tariff Order (MYTO), said the Presidency source, suggesting that the current MYTO would be reviewed. "The current MYTO is not reflective of cost of production. The new MYTO will reflect this to attract investors," he said. Before the new one comes into force, however, government plans to have a stakeholder review to carry along everybody in the process.
In London on Monday, Barth Nnaji spoke of the hard work being done, promising better regulation for power investors and faster reforms to encourage new investments.
Phillip Isakpa
•FG to provide N200 billion for labour related liabilities
In what will be seen by local and international investors as a radical shake up of its energy policy, Nigeria is now working at delivering a full-fledged private sector led power industry by June 2011.
The policy shift appears to be a key deliverable that the present administration in Abuja, which has barely a year to run, would want to hand over to Nigerians before it comes to an end after elections scheduled for between later this year and early next year.
"Expect the full privatisation of the 11 distribution companies, one transmission company and the six generation companies. In other words, by June next year, we expect to be handing over these companies and consequently the power sector to private investors," said one senior government source close to the engine room of the policy formulation now taking place.
A draft work plan is said to have been prepared with June, next year, as its destination. A public unfolding of the plan is not likely to happen, as serious work is being done internally to perfect all areas so as to avoid loopholes, it was learnt.
Involved in working out a comprehensive framework that will free the sector from decades of government stranglehold and deterioration, are the powerful power task force set up by President Goodluck Jonathan, led by Massachusetts Institute of Science and Technology robotics professor, Barth Nnaji, and the Bureau of Public Enterprises (BPE).
The Barth Nnaji-led Power Task Force, only a few weeks old, is working on the technical details to ensure the tidying up of the intricacies that have helped keep Africa's second biggest economy in darkness, and unable to supply 40 watts of electricity for a full day to its citizens for decades.
BPE, which has been involved for years in selling state-owned, non performing companies, will have the responsibility to pass control of the power industry from the Federal Government by selling off all the viable assets to private investors across the world.
The liabilities to be taken over by NELMCO include stranded debts (unfunded debts) that are made up of bank loans, taxes, debt to contractors, power purchase agreements with AES, Shell (for Afam VI), and Agip (for Okpai). But it will also handle other legacy issues, thus freeing up the sector for the emergence of a private sector controlled power industry.
"An order will first be made by Vice President Namadi Sambo, for the transfer of all the liabilities to NELMCO, and then this process will commence. This has not happened yet," said a high ranking BPE official.
But the Jonathan administration is underscoring its commitment to the process by removing all labour related liabilities from the balance sheet of the companies, to make them even more attractive to investors. Indeed, the Federal Government has already set aside N200 billion to tackle all issues concerning labour, and that negotiations with organised labour will be held to pave the way for smooth privatisation.
The full privatisation of the sector will also be based on working out a new Multi Year Tariff Order (MYTO), said the Presidency source, suggesting that the current MYTO would be reviewed. "The current MYTO is not reflective of cost of production. The new MYTO will reflect this to attract investors," he said. Before the new one comes into force, however, government plans to have a stakeholder review to carry along everybody in the process.
In London on Monday, Barth Nnaji spoke of the hard work being done, promising better regulation for power investors and faster reforms to encourage new investments.
Phillip Isakpa
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