19 PHCN Successor Companies broken down into 11 Distribution, 7 Generation Companies and the Transmission Company of Nigeria has been privatized. The physical assets of all 14 PHCN successor-companies was formally handed over to their new owners on November 1, 2013.- The handover was a culmination of 14 years of painstaking effort by the NCP, BPE and other key stakeholders to reform and liberalize Nigeria’s electricity industry, which began in 1999. A total of $2,525,824,534 was realized as proceeds from the 14 successor-companies scheduled for takeover. Of this amount, $1,256,000,000.00 came from the Distribution Companies (DISCOs) while the Generation Companies (GENCOs) raked in $1, 269,824,534.
- The Federal Government has equally set aside the entire proceed of N384 billion from the transaction to settle labour liabilities. The 2newly completed PHCN power plants (Olorunsogo and Omotosho)’s debt equity was swapped with the Chinese contractor that built the plants at $177.3m and $217.5m respectively.
- A grand total of approximately $3.3bn should accrue to FGN coffers from the PHCN Genco and Disco transactions. A maximum of 70% of this would be financed through debt/loan instruments. The lion’s share of the financing came via Nigerian banks; our banks are now major stakeholders and a long term player in the power sector.
- There’d be rapid restoration of lost capacity and significant new capacity added to make up for decades of Government neglect & mismanagement. The 9 PHCN Gencos (including Omotosho and Olorunsogo) only had available capacity of 2,692 MW as at 10th Sept. 2013, as against a total installed capacity of 6,976.40 MW. Financing the necessary capex to fund this incremental 4,284.4 MW that is required to achieve full capacity will cost an additional $4.28bn.
- For the Discos, significant investments will be required to improve efficiencies and reduce Aggregate, Technical, Commercial and Collection Losses. Based on the proposals submitted by the core investors, new meters will be installed over the course of the next 5 years as follows:-
No. Of New Meters: Year1-1,078,927, Year 2-1,433,373, Year 3-1,466,464, Year 4- 1,476,461, Year 5-1,062,773 Total =6,517,998.
- At an estimated weighted average cost (purchase and installation) of N25, 000 per meter, this amounts to over N150bn.
The FG’s Power Sector Roadmap rests on 7 critical pillars viz:- Empowering the Regulator (NERC), Establishing a Bulk Trader, Introducing Cost Reflective Tariffs, Engaging a Management contractor for TCN, Privatisation of Gencos, Privatisation of Discos, Strengthening of the Fuel-to-Power Arrangements
For financiers, an eighth pillar is the transfer of stranded liabilities and non-core PHCN assets to NELMCO.
- The completion of construction and the ongoing privatisation of the following 10 new power plants being built by the Niger Delta Power Holding Company Limited (NDPHC) in 2014 will bring in additional private sector stakeholders:-
- Breakdown on NDPHC Gencos Capacity in MW: Alaoji-961, Benin-451, Calabar-562, Egbema-338, Gbarain-225, Geregu-434, Ogorode-451, Olorunsogo-676, Omoku-225, Omotosho-451. TOTAL. 4,774MW.
At a crude estimate of $1.2m per MW, the sale of an 80% equity stake to core investors will raise close to $5 billion in total.
Roughly 70% of this latter figure to be financed in 2014 largely through debt/loan instruments provided by Nigerian banks.
A disciplined pursuit of revenue and growth by the Discos & Gencos would translate into many more hours of continuous electricity for the consumer who would only pay for electricity supplied and consumed.- Global best practices would be adopted in the privatised power sector, mediocrity will no longer reign (emphasis mine)!
This is an excerpt from a paper presented by Atedo Peterside CON Chairman, Technical Committee of the National Council on Privatisation at a “Special Forum on Financing the Power Sector Reforms for Economic Development” on Friday, 27th September, 2013 in Abuja.
Now on human capital: bank workers should note employment within the industry would skew from what it used to be.
- About 40,000 workers has been disengaged already! These people can’t function in the new dispensation.
- The banking/power sector is in full transformation, knowledge management will be a strategic driver for successful implementation of reforms.
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Numerous stakeholders with various backgrounds and representing different interest swill play major roles in the new shaped sector.
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Investors, bankers, professionals will conduct negotiations, sales processes, M&A, various transactions.
- Project Requirements
Sadly, many more bankers may be “axed” but a new skill acquisition by banks’ staff such as lawyers, risk managers etc would help. - New skills/certification would be demanded from workers who want to feature in the bank’s new phase of business activities.
- Graduates and Young Engineers willing to work in power utility companies? A new certification is required of you to scale up to employers standard.
- On completion of the necessary training, you could apply as an electrical expert, electrical technician for a power utility company or in an industrial set up, or work as a self employed Electrical Technician capable of performing installation, operation and maintenance jobs on electrical installations in utility, domestic and industrial networks.
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There are opportunities for young graduates seeking first engineering exposure or technical qualification in power engineering.
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Individuals and professionals willing to change fields but need entry knowledge, or any person interested to finding first foot into the power sector too.
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For Personnel from various industries i.e New Recruit Engineers, Control Engineers, Design Engineers, Operators, Maintenance Technicians, Process Engineers, Line Supervisors, Operation Managers, Maintainance Managers. A new level of certification is also required of you.
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A high knowledge of Industrial Automation/Instrumentation, power engineering and power systems would be an added advantage.
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Competences in General Electrical Engineering, Protection of Electrical Networks, Smart Grid Technology, Power Distribution Economics and Financial Grid, on Managing of Power Projects etc will be highly critical.
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We are now in a knowledge economy and everyone must move in line with the economic swings. Need further help?
- Kindly send a mail to power@employmentclinic.net
I hope this information helps someone out there.
This is an edited compilation of thoughts from Ms. Ronke Kosoko, Employment Solutions Strategist at Employment Clinic. She tweets from @ronkeemployment
