Nigeria Stalls Again on Power Privatization Plan

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--The government of Nigeria has once more postponed the sell-off of state-owned Power Industry assets. The Bureau of Private Enterprises (BPE) made the announcement: "According to the revised bid timeline issued to investors by the privatization agency, the announcement of the preferred bidders for the 17 successor companies will be made on or before 23 October 2012."

The reason given for the delay was the need to address concerns raised by Power Industry officials at a conference with the Nigerian government in November 2011. When the scheme finally moves forward, management contracts for transmitting electricity from power plants to substations will be awarded, and six power generation plants and 11 distribution companies supplying end users will be privatized.

In mid-2010, President Goodluck Jonathan said that generation and distribution assets would be sold off in 2011. But various vested interests and unions have been at work against the plans. It is even suggested that influential business interests fear that an improvement in public power supply, run by independent consortiums, might damage the lucrative import business in private diesel generators that are used to fill the power gap throughout the country.

It is estimated that the country would need to invest $10 billion annually over the next decade to meet basic energy needs. Currently, 4,500 megawatts (MW) comes out of the national system to serve a population of 160 million people, and the modest target of 6,000 MW by the end of 2012 could be missed.

Dr. Sam Amadi, the chairman of the Nigerian Electricity Regulatory Commission, has assured the public that increases in power tariffs would not take effect until May or June, when all the variables have been properly considered. He also said that the tariff would only go up by about 11%, and not 88%, as was widely speculated.

To enjoy constant and uninterrupted daily power supply, the country should be generating up to 25,000 MW, said Amadi. He stressed the need for private-sector investment for the desired objectives to be achieved quickly and added that this need propelled government intervention and the provision of an environment that would promote private investment.

An allocation of $380 million has been made as a subsidy for electricity consumption by the poor and rural dwellers in 2012, which will be followed by another $310 million in 2013.

For related information see February 22, 2012, article - GE's Immelt Leads Charge as U.S. Initiates Major Investments in Nigeria and December 6, 2011, article - Nigeria's Power Targets Slip While Waiting for Plant Privatization to Start.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.