Tuesday 1 October 2013

JONATHAN HANDS OVER PHCN TO PRIVATE INVESTORS


President Jonathan handed ownership of the bulk of the state electricity company to private buyers on Monday, completing one of the final stages of a privatisation process meant to end decades of debilitating power shortages.

Despite holding the world’s ninth-largest gas reserves, Nigeria produces one-tenth the amount of electricity as South Africa, for a population three times the size.

The Power Holding Company of Nigeria keeps the lights on for only a few hours a day, forcing those who can afford it to rely on expensive diesel generators that burn up billions of dollars from Africa’s second-largest economy. Improvements could be felt in two to three years, experts say.

"I congratulate our new owners who have taken over the engines and cables that are expected to drive not just the electricity industry but also the socioeconomic wellbeing of the nation," Mr Jonathan said, after handing certificates of ownership to private buyers at a glitzy ceremony at his villa. It was eight years after a law was passed to enable the process.

Most bid winners were oligarchs connected to the political elite, such as former military president Abdulsalami Abubakar, former military governor of Kano state Sani Bello and tycoon Emeka Offor, but with some recognised technical partners such as Siemens and Manila Electric.

Fixing electricity could reduce business costs by up to 40%, add 3% to GDP and cut the mass unemployment that fuels unrest seen in oil theft in the south and a bloody Islamist insurgency in the north, economists say.

The state power company was split into six generation and 11 distribution firms, all sold separately, for about $2.5bn in total.

Private buyers for five generation companies and 10 distribution firms collected their share certificates and operating licences. The buyers will take physical ownership of the infrastructure next month, government officials said. Two remaining companies are expected to be sold within six months. Nigeria is also planning to sell off 10 more newly built state power plants, all gas-fired, by next year. If competent buyers get the national integrated power project plants it could be a boost for foreign energy operators with latent gas reserves such as Royal Dutch Shell and Chevron.

Nigeria has agreed to pay off more than 14,000 workers at the power company with 384-billion naira ($2.4bn), about what it got from the privatisation.

Mr Jonathan said on Monday $750m had been raised to help improve transmission, some funds coming from a Eurobond.

Nigeria also signed a deal last week for Chinese state companies to build a $1.3bn power plant.

We pray this shall be the elusive solution we have been praying for................

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