The agreement signing event held at the Presidential Villa Abuja, and marked a ‘near-end’ to the PHCN privatisation process which began in 2005 with the enactment of the Electric Power Sector Reform (EPSR) Act.
This was as the Bureau for Public Enterprises (BPE) urged Nigerians to brace up for an initial but temporary electricity tariff hike which would come when these preferred investors finally take over the running of the successor companies.
The agreement consists of 13 legal and industry documents to be executed as a condition for the closure of the privatisation transaction.
But to qualify for the signing, all preferred bidders had to post Bank Guarantees for 15 percent of the transaction value within 15 business days of notification from the BPE.
Atedo Peterside, Chairman, Technical Committee of the National Council on Privatisation (NCP) confirmed that all participating firms have posted duly verified and confirmed bank guarantees.
Part of the agreement signed also was a Gas supply and Aggregation pact between Geregu, Sapele, Ughelli power plants and their respective gas suppliers.
The Generation Companies (GenCos) also signed ancillary agreements with the Transmission Company of Nigeria, thus paving the way for compensation to providers of services like black start, spinning reserve, frequency support etc, in line with best practices in the power industry.
The Nigerian Bulk Electricity Trading Company (NBET) also yesterday signed its first set of Power Purchase Agreements with six of the legacy power plants, as well as some vesting contracts with all the 11 distribution companies.
Meanwhile, arrangements have reached an advanced stage for the minister of power to inaugurate the Transmission Company of Nigeria (TCN) Board and for Manitoba Hydro International to fully take over the company.
Explaining the process, Peterside said that within 15 business days after the signing of the Sale and Purchase Agreement or the Shareholders’ Agreement, depending on which comes first, the bidder is expected to make a down payment of 25 percent of the share purchase price and later is expected to pay the remaining 75 percent after 90 days, to complete the transaction.
It is after the payment of the full purchase consideration that the successor company will be handed over to the preferred bidder, Peterside who was represented at the signing event by Haruna Sambo, Vice Chairman, Technical Committee NCP said.
Vice President Namadi Sambo told the gathering that the privatisation of the Generation and Distribution Companies created out of the unbundling of PHCN is one of the cardinal foundations of the restructuring of the power sector.
Represented by Osita Nebo, minister of Power, Sambo assured that as government prepares to hand over control of these companies to the private sector, necessary steps would be taken to ensure that the service delivery expectations of Nigerians are met. “Today marks the beginning of the power sector,” he stressed.
Announcing the imminent price hike in electric tariff, Benjamin Ezra Dikki, Acting Director-General, BPE, said the impending price increase resulting from the gradual removal of subsidies, will in no way compare with what the citizens pay to fuel their personal generators.
Dikki observed that as the government moves to the hand over date, there are transitional issues that will arise between the payment of 25 percent and the handover of the companies to the core investors.