[size=14pt]Brazilian Investor Offers $100bn for 23 Power Plants
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By Chika Amanze-Nwachuku and Ejiofor Alike

As 331 local and foreign companies submit Expressions of Interest (EoIs) to the Bureau of Public Enterprises (BPE) to acquire majority stakes in Nigeria’s electricity infrastructure, a Brazilian investor has proposed $100 billion to take over majority stakes in the entire 23 power plants slated for privatisation under the ongoing reform of the power sector.

On the transmission side, Power Grid Corporation of India Ltd (PGCIL) said it would submit a revised offer for the management of Nigeria’s electricity grid to be constructed at a cost of $3.5 billion.

THISDAY gathered that this special offer by the Brazilian firm, PROINFRA, was not part of the interest expressed to the BPE by the other 331 companies.

Under the BPE exercise, Essar, an Indian conglomerate; Tata Group, also of India; and ContourGlobal of the United States were among the 331 companies jostling to have the majority stakes in the power generating companies.

BPE had revealed that 174 applications were received from investors interested in acquiring the four thermal stations and the two hydro stations, while 157 prospective applicants expressed their interests in acquiring the 11 distribution companies.

Essar was said to have expressed interest to invest over $2 billion for a generating capacity of at least 2,000 megawatts, an equivalent of two-thirds of the country’s current average electricity output.

But outside the BPE arrangement, the Brazilian investor has proposed a $100 billion special offer to acquire the majority stakes in the entire plants.

Minister of State for Power, Mr. Nuhu Wya, told THISDAY Sunday that the special offer was a demonstration of the success of the ongoing power reform and the confidence of foreign investors in the reform agenda.

Wya stated that at the various investors’ fora held in London and other cities in the world to showcase the numerous opportunities in Nigeria’s power sector, the foreign investors demonstrated an unprecedented level of enthusiasm in the reform.

“A company in Brazil offerred $100 billion to take over 23 power stations across the country and this is outside BPE bid,” he said.

Wya, who urged electricity workers and their various unions to support the privatisation process, also reminded them that they would be the greatest beneficiary of a reformed power sector.

He assured the workers that the new investors would look out for the best among them to run the plants, instead of bringing workers from outside the sector.

“Nobody, no wise business man, will do that; no wise business man will like to let off anybody. Nobody will come and say that he wants to sack anybody. I, for one, will not do that and I believe that I am a successful business man. I will not do that because without human resources, whatever machines you put in place will be in vain,” he said.

The minister also stated that discussions were still ongoing over the successor companies of the Power Holding Company of Nigeria (PHCN), adding that no final decisions had been taken to hand over the plants to the core investors.

“We want to be as transparent as possible. We don’t have any hidden agenda. This is one thing with this administration. What we want is to ensure that we improve power supply in this country for the benefit of all Nigerians,” he added.

BPE had between December 13 and 20, 2010, published advertorials in local and foreign media inviting prospective core investors to express interest in the 11 distribution companies unbundled from PHCN.

It also invited prospective core investors to express interest in the four thermal power stations and as concessionaires for the two hydro power stations. The initial deadline for receipt of the EoIs, which was Friday, February 18, this year, was extended to Friday, March 4, 2011, following representations by prospective investors, who attended the five-city Electric Power Investors’ Forum that attracted world class investors willing to participate in the privatisation exercise.

Meanwhile, Power Grid Corporation of India Ltd (PGCIL) has said it will submit a revised offer for the management of Nigeria’s electricity grid.

The Indian state-run power giant was among the three companies shortlisted by the BPE during a 2007 bidding round for the management of the Transimis-sion Company of Nigeria (TCN).

The other two were Canada's Manitoba Hydro and Electricity Supply Board of Ireland.

Under the power roadmap, electricity generation and distribution would be privatised, while the Federal Government will continue to own the national grid but its management will be privatised.

PowerGrid said in a report on its website yesterday that the Nigerian government had called for revised offers for the management of the national grid, after enhancing the scope of the project.

A senior executive of the company was quoted in the report as saying the deal would be finalised in the next two to three months.

“We expect to bag the deal in next two to three months,” said the unnamed company executive.

Top executives of the company last month met with Wya to restate the company’s interest in the management of the TCN.

Indian High Commissioner to Nigeria, Mahesh Sachdev, who led the delegation of representatives from PGCIL and India's National Thermal Power Corporation (NTPC) to Wya’s office in Abuja, said the delegation had come to restate its commitment to work for the improvement of Nigeria’s transmission system for faster economic transformation.

He said: "India and Nigeria could be economic talking points of the globe in the next decade if they work together and appropriately deploy their surplus natural and human gifts.”

PGCIL had said on its website recently that it was the lowest bidder amongst the three parties that submitted offers for management of Nigeria's transmission company.

"We had been short-listed two to three years back, but there had been delays and now we have been named the lowest bidder," PGCIL Chairman S K Chaturvedi said.

PowerGrid Corp. had in 2007 won a three-year contract to manage Nigeria's electricity transmission network. The arrangement then, would see Nigeria pay the company $5.1 million in fees to manage the ailing network, which had suffered from decades of neglect. Ireland's state-run ESB International was the runner-up bidder, at $7.6 million, while Canadian Manitoba Hydro entered the highest bid at $8.5 million.

However, the Indian utility company was declared the preferred bidder as sources said, government was interested in seeing the ailing company managed by foreign experts with technical competence.

"PowerGrid Corporation of India is hereby declared the preferred bidder," said a member of the NCP, Mohammed Hayatudeen, at an official bid opening ceremony conducted in 2007.

The deal, which was subject to approval by the NCP, had been delayed due to the non-implementation of the Nigerian Electricity Regulatory Act, which was passed in 2005.

The Act set up a sector regulator, stripped the PHCN of its monopoly and unbundled its grid into six generation companies and 11 distribution firms.

To revive the power sector, President Goodluck Jonathan, in August last year, launched the power roadmap. The PHCN’s generating plants as well as 11 distribution companies were slated for sale to private investors.

In a related development, the BPE has issued the requirement for the next stage of the privatisation process. The BPE boss, Ms. Bolanle Onagoruwa, said on receipt of Information Memorandum and Request for Proposal, pre-qualified bidders would be given access to physical and e-data room; would be able to carry out physical due diligence; would be issued with draft copies of the Multi-Year Tariff Order (MYTO); would be encouraged to submit comments on MYTO; and Bidder comments on MYTO would be subject of conference to be organised by sector regulator, Nigerian Electricity Regulatory Commission.

She pointed out that the objectives of the electric power sector reform were to increase electrification; ensure cost reflective tariffs; attract private sector investments into the sector; create competitive electricity market; induce investments in new power generation facilities; rehabilitate existing power generation facilities; improve efficiency by increasing collections; reduce costs and technical and non-technical losses; and improve customer service. The BPE said the firms would be shortlisted and the requests for proposal sent to the successful ones.

The core investor sales to be carried out through international competitive bidding will cover the 11 electricity distribution companies in the country.

They are Abuja Electricity Distribution Company Plc; Benin Electricity Distribution Company Plc; Enugu Electricity Distribution Company Plc; Eko Electricity Distribution Company Plc; Ibadan Electricity Distribution Company Plc; and Ikeja Electricity Distribution Company Plc.

Others are Jos Electricity Distribution Company Plc; Kaduna Electricity Distribution Company Plc; Kano Electricity Distribution Company Plc; Port Harcourt Electricity Distribution Company Plc; and Yola Electricity Distribution Company Plc.

The Federal Government had stated that the national electricity grid would be jointly financed with the private sector and development agencies. The BPE said once the bid was finalised, the management of the new super grid, expected to boost electricity generating capacity to over 14,000 megawatts (MW) by the end of 2013, would be handed over to the successful firm by the end of the year.



http://www.thisdaylive.com/articles/brazilian-investor-offers-100bn-for-23-power-plants/88571/

This deal would almost double nigeria's economy, hence why i don't believe it

I don't believe this offer was made, but if it was, then Nigeria should hug it and not let this deal pass them by. Most power projects cost $1 billion per 1,000 MW, and we produce a little less than 4,000 MW, with installed capacity of about 7,000 MW. So I personally won't buy all of Nigeria's power plants for more than $10 billion.

is nigeria's power sector worth that amount. its either the investor is ignorant or up to something. in case they are serious, we sbould reject it with speed as that will amount to sselling a vital part of the nation. the power problem can be solved with strategy, since we have then needed resources, except technical expertise.

This is wonderful but I hope tariffs wont touch the sky cos indians are only good at exploiting

Countries using Nuclear power to produce electricity


India sucks at power generation.
Take a look at the number of Nuclear power plants owned by India and look at the
output capacity.
Then compare it with Germany or China,

Is Nigeria afraid of change or what is wrong with us?

Having read through a bit of GEJ's plan, it doesn't make sense to sell everything to one buyer.

Better to unbundle the plants and have them independently owned, in my opinion.

And as others have said, the price seems a bit high?

That Brazilian guy does not understand the dynamics of Nigeria

The offer is not just for the power infrastructure, but rather for a juicy government sanctioned monopolistic position (which BPE never advertised but the brazillians think they can get). Hence it must be rejected. How can we hand over 23 power plants to the same single foreign firm, thats like selling your people into slavery.

Secondly, am not too happy with the possibility of a foreign firm, let alone an indian firm managing our power transmission system.

The Power Transmission system should also not be concessioned off as a single unit. else how do we benchmark the managment performance of the concessionaires.

The Transmission Infrastructure could be broken down into four units and concessioned off seperately, and preferably to nigerian firms.

I also wonder if the distribution companies can compete against each other, seeing that they are named after specific zones. no monopoly please.

The Power Transmission system should also not be concessioned off as a single unit. else how do we benchmark the managment performance of the concessionaires.

How would this happen? Right now, the grid is one unit, right? Not several, like in some other countries (e.g., the US)?

The Transmission Infrastructure could be broken down into four units and concessioned off seperately, and preferably to nigerian firms.

I also wonder if the distribution companies can compete against each other, seeing that they are named after specific zones. no monopoly please.

Distribution is inherently monopolistic. I don't see any way to avoid this.

odiaero:

Brazilian investor, $100bn, am i the only one seeing this? even the world richest man dont have that amount of money

Don't be ignorant business men do business with money borrowed from banks, it could be up to 20 banks providing the funds.

eros:

"If it sounds too good to be true, it is." There is more than what we are reading here. This so called Brazilian investor has more in his sleeve than he is letting out. I wouldn't be surprised that he is merely fronting for some Nigerian money bags.

I dont believe he's fronting for anyone but I do believe if the money bags are not involved now, they will in the future. $100bn is alot of money, even if you steal $40bn you wont want to part with $1bn just like that

ekt_bear:

How would this happen? Right now, the grid is one unit, right? Not several, like in some other countries (e.g., the US)?

The Transmission Infrastructure could be broken down into four units and concessioned off seperately, and preferably to nigerian firms.
Distribution is inherently monopolistic. I don't see any way to avoid this.

The distribution companies are only attached to their meters and customers, hence they do not have to be localized. they should be free to do business anywhere.
If I can not choose from among two or four different distributors from at my home say in Ankpa, then their is no market competition, but localized monopolies. and Whats the essence of all the unbundling.

The whole idea of unbundling the sector is to remove transmission function from distribution companies, so they only buy power into the greed and take it out from any point via their customers meters. If they will not be competing with each other, the unbundling is fruitless.

As for Sub-dividing the National Grid, you only need a lead operator among the four, to whom every other sub division must key-in. The network does not need to be entirely separated to be divided into units. Especially when the number of sub-units is small. The Concession is also for management and maintenance, hence non- of the sub units is at loss

The Brazillian guys know what they are doing. They will get back their investment in a few years certainly. They know that the Nigerian Government will not put a cap on their billing rates and that Nigerians will pay for anything. An average household's bill will be the highest in the whole world. Watch and see.

This deal would almost double nigeria's economy, hence why i don't believe it

Does not sound right to me as well.

Okay if you fund it thru Global banks, the modalities to make your money back within a certain period will surely put the Polity at the mercy of this Company, Generation 2 Generation.

4rm a financial Stand Point, I can understand a 1, 2, 3, or even $10 Billion investment in Nigeria even within the Political Climate bn put into consideration but @ $100 Billion it beggers belief even if the finance is staggered @ $10 Billion per year.

Naaaaa. ds one na Political Noise, not buying it at all and doing more research with my Guys in the Top Equity Houses and Global Bourses around the world to get more insight,

[size=16pt]BRAZILLIAN INVESTOR OR BRAZILLIAN 419, ALL THAT GLITTERS IS NOT GOLD. WE GOT TO SHINE OUR EYES WELL B4 SIGHNING ON THE DOTTED LINES. THIS MIGHT BE ANOTHER MARDOFF IN THE MAKING.[/size]

odiaero:

Brazilian investor, $100bn, am i the only one seeing this? even the world richest man dont have that amount of money

You don't understand the way business works!!!
First the Brazilian investor for PROINFA, CAP is not a person. It is an investment Fund with billions of dollars in infrastructure investment to its credit!
Secondly, such an investment would not be made in one fell swoop! It would be made installmentally.

That kind of money in the hands of the private sector would go a long way in changing our power fortunes dramatically!!!

Grab the money and regulate now.

Guys, the BPE never advertised for any guy to come buy up 23 of our power plants at any price.
The Brazilian guys probably think we do not have a tight game, hence the money offer for monopoly in a new market!

There zealousness in even making that proposal made me figure that their is something wrong with or missing in the sector blue print where they saw a loop hole, hence are even confident of creating another loop hole for them selves.

I did see some obvious loop holes
1. Making a single firm the concessioniar of your whole national grid: Too much power in one firm, and a foreign firm for that matter. the management and  maintenance is not that techy, can be done by Nigerians, can be done by smaller firms too.

2. the distribution companies are Localized to a specific zone: That assures all industry players of very high tariffs against consumers.  (This needs to be replaced with completely de-localized and preferably small sized distribution firms, as well as no-market entry barriers to new distributors)

Before u know it the guys will be building some secret located Nuclear Reactor Plant in 9ija, 


Hmmmmm ds Story na for Nduka (Mr iPsos, Survey Paper ) ooooo na hin he break oooooo

PDP, na una oooooo

Whaaat!!!!. Oya Goodluck. Handover quick, quick. One hundred kini? If its true (desperately praying so) then consider the power problem solved. The only problem here is the inflationary effects of such a collosal sum if not handled properly. The good thing is that the money is funneled from an emerging economy - Brazil. I suppose in the cost of such funds - monetary and political will not be that high; and their technologies will be easier to transfer.

However something tells me if ts too good to be true it probably is. For now who cares about monopoly. PHCN was one anyway. All it would give them is a head start. It does not mean the market is done and dusted for them. Subsequent players will simply have to come to the table with their bags and bagages.

We should not be unduly worried over that. The power market in Nigeria is massive. Potentially the largest in Africa and I would estimate PHCN has effectively tapped no more than 15 to 20 percent. Like for the telecomms operators they all ignored NITEL's infrastructure and built theirs some even coming late to the party like Etisalat and in a way Airtel. When they see the massive revenues generated by the Brazilian consortium no one will beg them.

BRAZILLIAN INVESTOR OR BRAZILLIAN 419, ALL THAT GLITTERS IS NOT GOLD. WE GOT TO SHINE OUR EYES WELL B4 SIGHNING ON THE DOTTED LINES. THIS MIGHT BE ANOTHER MARDOFF IN THE MAKING.

make we no go be like dem Keke Ogungbe ( Kenny Music) dey sign dem Artist 4 life/tie down/handcuff deals oooooo

The distribution end is going to be monopolistic, even if the Government pretends otherwise, do you think each one of the companies will wire cities? I am also sure that capacity sharing will not be done as they will be sabotaging one another, until we have a government that can regulate properly, all of this is a pipe dream ( we go pay tire).

This will result to the same NEPA,PHCN total monopoly which would at the end breed inefficiency. The power plant should be sold to several investors who are interested please to encourage competition

KenGali:

The distribution companies are only attached to their meters and customers, hence they do not have to be localized. they should be free to do business anywhere.
If I can not choose from among two or four different distributors  from at my home say in Ankpa, then their is no market competition, but localized monopolies. and Whats the essence of all the unbundling.

Who is going to want to be the guy to spend money building a 2nd distribution network (to compete against say Ikeja Distribution Co)? I don't see how your suggestion makes sense. . . distribution networks are inherently monopolistic.

The whole idea of unbundling the sector is to remove transmission function from distribution companies, so they only buy power into the greed and take it out from any point via their customers meters. If they will not be competing with each other, the unbundling is fruitless.

No, for the reasons stated above.

As for Sub-dividing the National Grid, you only need a lead operator among the four, to whom every other sub division must key-in. The network does not need to be entirely separated to be divided into units. Especially when the number of sub-units is small. The Concession is also for management and maintenance, hence non- of the sub units is at loss

Not really a big deal either way, in my opinion.

hehehehehehehehehehe ,and this time FRED AJUDUA IS A BRAZILIAN

hehehehehehehehehehe ,and this time FRED AJUDUA IS A BRAZILIAN

Haba, Egbon Fredo cannot still be in the biz @ close to 60 now u think,

^^^ its pay back time DONT YOU THINK? and abeg forget age

This sounds like that unfinished airport in Asaba that they commissioned to get votes. GEj is desperately trying to mislead people.