HomeIndustry SectorsFinance and PolicyTwo preferred bidders miss Nigeria's PHCN privatisation payment deadline

Two preferred bidders miss Nigeria’s PHCN privatisation payment deadline

2 September 2013 – Thirteen consortia made the August 21st deadline for the preferred bidders in the privatisation of Power Holding Company of Nigeria successor firms. However, two consortia missed the deadline.

The successful consortia were: West Power and Gas, the preferred bidder for the Eko distribution company; NEDC/KEPCO, Ikeja distribution company; 4Power consortium, Port Harcourt distribution company; Vigeo consortium, Benin distribution company; Aura Energy, Jos distribution company; and Kann consortium, Abuja distribution company.

Others who met the payment deadline are: Integrated Energy Distribution and Marketing Company, the preferred bidder for both the Ibadan and Yola distribution companies; Sahelian Power, Kano distribution company; Transcorp/Woodrock consortium, Ughelli Power; Amperion, Geregu Power; Mainstream Energy, Kainji Power; and CMEC/EUAFRIC Energy JV, which made part-payment for the acquisition of Sapele power.

The two preferred bidders that failed to pay the 75% balance of the funds to completed the purchases of their winning bids as scheduled were: Interstate Electrics consortium, the preferred bidder for the Enugu distribution company, whose members include Chief Emeka Offor’s Chrome Energy, Power House International and Metropolitan Electricity Authority of Thailand; and North-South Power Company, the preferred bidder for Shiroro power.

The North-South consortium is made up of the Niger state government, XS Energy, BP Investment, Urban Shelter, Road Nigeria, China International Water Electric and China Three Gorges Corporation.

Going by the rules guiding the privatisation process, the two firms have lost in their bid to acquire the power assets as the reserved bidders will now be given the opportunity to step up and acquire the companies upon the payment of the bid prices.

One of the reserved bidders, Eastern Electric Company, said it was ready to take over the Enugu Electricity distribution company following the failure of Interstate to pay before the expiration of the deadline. It said it was ready to pay US$126 million for the takeover of the company, which provides power to the south-eastern part of the country.

The failure of the two consortia to meet the payment deadline, experts said, confirmed the concerns that a number of the investors were finding it difficult to raise money from their lenders.

Both companies had met the March 21, 2013 deadline for the payment of the mandatory 25% of the offer value of their bids by crediting the account of the Bureau of Public Enterprises (BPE) with US$31.5 million and US$27.9 million respectively.

Until recently, the failure to meet the deadline would have seen the forfeiture of the 25% paid earlier. However, the head of public communications at BPE, Chigbo Anichebe, told Nigerian publication Punch that this rule had been reviewed.

BPE will deduct the cost of transaction from the 25% initial payment and return the balance to the defaulting preferred bidders.