Govt Open To Divestment Of 40 Percent Shares In DISCOs – Fashola

Govt Open To Divestment Of 40 Percent Shares In DISCOs – Fashola

The Minister of Power, Works and Housing, Mr. Babatunde Fashola, has stated that the federal government would be open to welcome new and tangible offers that would lead to it divesting its 40 percent shares in the 11 electricity distribution companies (Discos) in the country.

Speaking recently on a television programme, Arise News in Abuja, Fashola said the government would look forward to having private investors bring before it good proposals that would convince it to divest part of its shares in the Discos.

He also disclosed that negotiations for the finance of the 3050 megawatts (MW) Mambilla Hydro Power Project would soon kick in following the government’s award of the contract for the $5.72 billion project.

He said, “Certainly, the government wants to see more investments in the sector, you would have heard from the president and from the vice president that our role really is to enable private sector lead our economy.

“So, I would like to see an offer on the table, and you will see how I will respond to it. There is an assumption that there is an investment we are turning aback and if there is one that I am missing, please show me the direction to it.”

He further said, “At the National Council on Privatisation recently, we approved the privatisation of another of the power plants – the Afam Power Plant.

“So it shows you government wants to see investment, but the investments that are coming into the country are first and foremost portfolio investments on the stock market and over time you will see larger footprints settling in the real sector and infrastructure and that is when you know the economy is really back on the swing,” he asserted.

The government had in 2013 sold 60 per cent of the shares of the Discos to preferred investors during its privatisation of successor generation and distribution assets of the defunct Power Holding Company of Nigeria (PHCN).

Speaking further on government’s plans in the power sector, Fashola said the plan for the Transmission Company of Nigeria (TCN) would eventually lead to it getting a new board and properly staffed.

He said the delay in the confirmation of the chairman-designate for the Nigerian Electricity Regulatory Commission (NERC) was caused by the stalemate between the Senate and the executive over the interpretation of the powers of the president with regards to appointments into executive bodies not listed in the constitution.

But he said the stalemate had not necessarily stopped the NERC from regulating the sector.

Meanwhile, two wholly-owned subsidiaries of Seven Energy International Limited have commenced the full supply of gas to the 561-megawatt capacity Calabar Power plant built by the Niger Delta Power Holding Company (NDPHC), under the National Integrated Power Project (NIPP) at Ikot Nyong, near Calabar, Cross River State.

The two subsidiaries — Seven Energy Finance Limited and Accugas Limited — said in a statement Monday that Accugas Limited commenced the supply of gas to the power station after all the conditions precedent to the long-term Gas Sales Agreement (GSA) for the supply of gas to the plant have been satisfied.

Calabar Power Station is one of the 10 medium-sized power plants built by the NDPHC to deliver 4, 2771 megawatts of electricity to the national grid.

The other NIPP power plants include the 451MW-capacity Ihovbor Power Plant in Benin, Edo State; the 451MW-capacity Sapele II Power Plant in Ogorode, Sapele in Delta State; and the 434MW-capacity Geregu II Power Station built in Ajaokuta, Kogi State.

Others include: the 676MW-capacity Olosunsogo II Power Plant built in Olorunsogo in Ogun State; 451MW-capacity Omotosho II Power Plant in Okitipupa Local Government Area of Ondo State; 961MW-capacity Alaoji Power Plant in Abia State; 225MW-capacity Gbarain Power Plant in Gbarain Ubie, Bayelsa State; 338MW-capacity Egbema Power Plant located near Owerri in Imo State and the 225MW-capacity Omoku II Power Plant located near Port Harcourt in Rivers State.

However, the operations of the plants have been constrained by gas shortages.

Seven Energy’s midstream gas infrastructure assets, focused in the southeast Niger Delta, include the 200 million standard cubic feet per day (mmscf/d) capacity Uquo gas processing facility and a gas pipeline network of 227 kilometres with distribution capacity of 600 mmscf/d.

The Calabar GSA is supported by a World Bank Partial Risk Guarantee (PRG), a federal government-backed financial instrument that will secure the supply of up to 131 mmscf/d of natural gas under the Calabar GSA to guarantee the consistent generation of up to 561 MW of electricity to the national grid, representing around 15 per cent of current power generation in Nigeria.

“This arrangement, which guarantees payments to Accugas for gas supply, is backed by the federal government of Nigeria and the International Development Agency of the World Bank. It is the first of its kind for gas supply in Nigeria and is a demonstration of the federal government’s commitment to increasing power supply in the country and stabilising the ‘gas to power’ value chain,” the statement explained.

Before Accugas commenced the full supply of 131mmscf/d of gas to the Calabar Power Station, it has been supplying gas to the plant under an interim gas sales agreement, with average deliveries in 2017 to date of 45 mmscf/d.
According to the statement, the Calabar GSA includes a 90-business day grace period during which the PRG cannot be called upon.

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