The coalition of Northern Groups (CNG) and other stakeholders, on Wednesday, expressed stiff opposition against ongoing plans by Federal Government to privatise the Calabar, Ihovbor, Olorunsogo, Omotosho and Geregu Power Plants under the Niger Delta Power Holding Company (NDPHC).
The stakeholders who vented the opposition during the investigative hearing accused National Economic Council (NEC), National Council on Privatization (NCP) and Bureau of ‘Public Enterprises (BPE) to sell 100 per cent shares in the five power generation assets, as approved by the National Council on Privatisation (NCP) on April 22, 2021.
Speaking on behalf of the Coalition, Balarabe Rufai who described the planned privatization of the power assets as unacceptable and suspicious, alleged that the power assets with a value of $5 billion were undervalued at $3 billion.
He observed that the Board of Directors had during the 46th meeting held on Friday, April 23, 2021, considered the memorandum for the special budgetary intervention of $100 million for improved off-take under bilateral contracts in furtherance of the drive to sell these NDPHC’s power assets.
While arguing that the proposed privatisation of power assets “North and potentially cause greater economic instability in the country to continue unchecked,” he maintained that the “current privatisation move is part of the several schemes to cripple the North economically by shortchanging it.”
“As the representative of various interest groups from Northern Nigeria, the CNG has studied the proposal carefully and concluded that it is quite untimely the chief justification adduced by proponents of the exercise is not sustainable and is the most unjustifiable act of injustice being perpetrated against Nigerians collectively, and Northerners in particular.”
He alleged that the previous privatisation attempts by successive administrations in 2013 by President Goodluck Jonathan’s administration was inadvertently stalled and a re-launch was considered which was also militated against by the myriad of challenges that bedevilled the power sector.
“It is also pertinent to mention, that some of the preferred bidders in the earlier transactions are in court with NDPHC and the subject of cancellation of the privatisation exercise is before the court for adjudication.
While noting that the assets under consideration do not belong exclusively to the Federal Government but the three tiers of government, the Coalition called for “immediate and unconditional discontinuation of this or any subsequent move to privatize the said assets and immediate and complete reversal and observance of the initial agreement to revolve the power generation projects to the North.”
He further alleged that the “current privatization plot, therefore, reneges on the initial understanding that after certain years of piloting the projects in Southern Nigeria, the assets were to be sold and the proceeds reinvested in setting up hydro generation assets in parts of northern Nigerian states for a similar length of time.
“That contrary to the original intent of the shareholders which was to re-invest proceeds from privatisation in developing renewable (hydro and solar) generation projects, this fresh privatization plan purports to divest the proceeds into funding the federal government budget deficit.
“That this justification is not supportable and stands unacceptable for the fact that the NDPHC subsidiary companies are not wholly-owned by the FGN but include other shareholders — the states and local governments including those of northern Nigeria which stands the risk of being shortchanged by this plot.
“That the timing of the planned privatisation is ill-considered as it will not enable the greatest financial value to the shareholders due to the current commercial and technical constraints in the industry – poor state of transmission/distribution capacity and underpayments/ illiquidity in the market.
“These constraints mean that the assets are likely to be undervalued by investors and cause a loss of the significant investments in the assets.
“That the hurried determination to carry out the exercise without considering the pending issues around litigation that are yet to be resolved in court, is very suspicious.
“That contrary to the current arrangement, the BPE, a statutory body, can only act in accordance with its enabling legislation, the Privatisation Act which expressly lists the enterprises to be privatised under it, and NDPHC (or the subsidiary generation companies), not being wholly owned by the FGN, are not so listed.
“That in the similar cases where State Governments also have shares in the company being privatised, BPE had only privatised FGN’s shareholding and left the States to deal with their shareholding).
“That State Government assets can only be disposed of in accordance with the relevant State law and therefore cannot validly accede to the application of federal legislation to the divestment of their ownership interest in the NIPP assets.
“That, to the extent that the assets of the subsidiaries represent NDPHC’s critical assets, the key corporate approvals required for the privatisation of the successor generation companies, however, are approvals from NDPHC’s Board of Directors, and shareholders, i.e. Federal, State and Local Governments.
In his presentation, NDPHC Managing Director, Mr Chiedu Ugboh stated that despite the abundance of gas resources in Nigeria, the NIPPs suffer starvation from gas supply to power their operations.
The NDPHC boss also noted that despite the company’s capacity to generate more than 5000 megawatts of electricity, the company is constrained to generate only 700MWfor sale due to the lack of distribution capacity by the distribution companies.
He also stated that even the 700 megawatts is irregular adding that the situation is killing the machines making them to use more fuel.
On the constraints faced by the company in its operations, he said the major one faced by it is distribution capacity and unavailability of gas.
“We have been to many places to look for gas, even in Geregu, we don’t have a single molecule of gas. Papalanto, the same thing. There’s no gas anywhere to run these plants which is a huge constraint.”
Speaking on the company’s existing assets and series of interventions made so far, the MD said: “The NDPHC has 10 power plants with the generation capacity of over 5000 megawatts. In addition to power generation, NIPP also intervenes in transmission projects, of which we have 41 of them.”
“We added 6460MVA and 2686 kilometres of high tension kV lines for the Transmission Company of Nigeria. TCN is using these assets now but the legal transfer is yet to be done to get the TCN to pay for them.
“All states of the federation are beneficiaries of our distribution intervention. 374 distribution projects such as injection substations, over 4000 11kva lines which once finished will be transferred to the distribution companies for use following the legal transfer is completed.
“We have deployed 20,000 units of a solar home system to homes in communities that hitherto never knew what electricity looked like.”
In his keynote address, Speaker Femi Gbajabiamila observed that the power sector – the policies, systems, commercial and governing interests around generating, storing, transmitting, and distributing electricity to power homes and industries is a critical component of our national economy. It is an area that has been the subject of multiple interventions by governments, and billions of dollars in local and foreign investments. It is also a sector that has unfortunately failed to deliver on the demand and expectations of the Nigerian people.
“Despite this history of failure, and of resources expended without result, we do not have the option of putting our hands up and walking away. Without an effectively functioning power sector, we will never be able to build the industries, power innovation and create enough jobs to cater to the large and rapidly expanding number of young people in our country.
“We will not be able to give our people the quality of life that allows them to dream big dreams and achieve grand aspirations. Therefore, our only option is to try to get it right, to correct the mistakes of history and make the future better for all our nation’s people.
“The Federal Government of Nigeria has proposed to sell five power plants under the National Integrated Power Project (NIPP) to raise liquidity to bridge the funding gaps in the power sector, while at the same time bringing in private investors who have the expertise, the resources, and the expressed desire to make sure these plants operate optimally.”
The Speaker who was represented by the Deputy Minority Leader, Hon Toby Okechukwu, reiterated the House resolve to review the policy process that led to this decision to understand the presumptions and expectations that have motivated this policy decision, assured that the House “will examine the process of privatisation as designed and implemented by the relevant Ministries, Departments and Agencies of the Federal Government of Nigeria to make sure that the process follows due process of the law.
“Above all else, we are here to make sure that the best interests of the Nigerian people inform every point of the process. To succeed in this regard, we will work with stakeholders – the private sector, labour, community leaders, and civil society. We will compel information from the government. And we will be guided by the submissions of experts from across the power sector value chain,” he noted.
In his ruling, Chairman, House Committee on Power, Hon Aliyu Magaji summoned Governor of Central Bank of Nigeria (CBN), Godwin Emefiele; Director-General of Budget Office of the Federation, Ben Akabueze and BPE Director-General, Mr Alexander Ayoola to appear before the Committee, to explain the rationale behind the planned privatization of NIPP power plants under the Niger Delta Power Holding Company.
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NDPHC: Coalition of Northern Groups, others kick against planned privatisation of five power plants
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