PHCN Privatisation: PDP Chief Warns against Erosion of Investors’ Confidence

A stalwart of the ruling Peoples Democratic Party (PDP), Dr. Katch Ononuju, has criticised the  privatisation  of key power assets  by the Bureau of Public Enterprises (BPE), which has led to the successful  sale of  generating companies (Gencos)  and distribution companies (Discos) unbundled from the Power Holding Company of Nigeria (PHCN).
Ononuju, while speaking on programme on a private television station, African Independent Television (AIT), on Monday, expressed  disappointment over what he described as “fraudulent bending of the rules and shifting of the goal post in the middle of the game to satisfy certain powerful interests even when their demonstrable, financial, technical abilities and competence have been called to question.”
He cited the way and manner power assets in Sapele and Enugu were  handled, which he described  “as questionable.”
He  criticised the  BPE and the National Council on Privatisation (NCP) for undermining their own rules  in the case of transactions for the Enugu Disco and Sapele Genco sale.
He  lamented that the signal being sent with the mishandling of the two transactions was capable of eroding confidence in the power privatisation exercise.
He said: “It cost reputable and serious bidders about $2 million to do a proper due diligence and bid preparation on a power asset, and if you start undermining the rules in the middle of the game for selfish reasons, then serious bidders will be discouraged from participating further.
“And we are doing this just for the initial phase of the process, which  we envisage will get Nigeria ’s generating capacity to 40,000 megawatts of power by 2020. So what we are doing now is small compared to what has to be done to get Nigeria to that target. Our international partners who have come to participate in this with us today will not have confidence in anything we are doing tomorrow.
“A person who failed technical evaluation and failed to make payment before the August 21 deadline has been given Enugu Disco. On Sapele Genco, the preferred bidder, who failed to make payment even after almost two months after the deadline elapsed has not been disqualified. What we are saying is that if power works in this economy every other thing will follow. The only thing that will make the economy to grow the way it should is adequate power.
“In the case of the Sapele Genco and Enugu Disco, what we are saying is that the government should not just give it out to anybody just because you want to give it to your friends. In the case of Sapele, somebody bid $201 million but is unable to raise the money to pay for it even after almost two months.
“How then can they raise the required funds to refurbish the plant? Why have they not been disqualified, and why has the reserve bidder not been invited to pay for the asset according to BPE’s rules so that Nigeria can move on to get the power capacity that it so badly needs? Why are the BPE and NCP constantly bending their own rules in order for to benefit the preferred bidders who have proved incapable of providing the power for which the assets are being privatised in the first place? It is fraudulent because things are not being done according to the rules that were set to ensure transparency and it is morally and ethically wrong.”
Ononuju, however, praised the federal government for having the political will to privatise the power assets.
According to him, if the government should be willing to summon such political will to tackle other problems bedevilling Nigeria, the nation would be better for it.
After some initial delay, the NCP a fortnight ago finally approved the payments of the remaining 75 percent of 14 out of the 15 bidders for the acquisition of the 15 PHCN  successor companies.
Rising from its sixth meeting in the year, the NCP  approved the late payments by North South Power and Interstate Electric Limited for Shiroro Power Plc and Enugu Distribution Company Plc respectively but subject to the late payment penalty as provided in clause 12.20 on interest for late payment and clauses 5.5, 5.5.1 and 5.5.2 of the Share Purchase Agreement (SPA).
However, the council referred the case of CMEC/EURAFIC consortium, the preferred bidder for Sapele Generation Company which had paid only $119,887,156 out of its $201,000,000 bid consideration to the Office of the Attorney General of the Federation (AGF) and Minister of Justice for advice. It was gathered that there were potential legal issues, which needed to be resolved.

Posted by SirVic for wetopup(News Laboratry)