Govt set to offload shares in privatised PHCN firms

CONTRARY to stakeholders’ position, the Federal Government has not entirely offloaded all its shares in some of the recently privatised Power Holding Company of Nigeria (PHCN) successor firms.

  In fact, going by latest statistics sourced by The Guardian, government retained shares in some of the newer thermal (gas) plants, while it sold off all its shares in the very old plants, and indeed, only concessioned the hydro-electric power plants for a period of 20-25 years.

  And for states which had previously made some level of investments in the firms situated within their region, the Bureau of Public Enterprises (BPE) will soon start the allocation of shares to them from the remaining government stakes in such plants.

  But this move is being delayed by the governors themselves, as they have allegedly not given the Nigerian Electricity Regulatory Commission (NERC) full collaboration in an ongoing verification exercise to determine the extent of such investment so far.

  In a post-privatisation interview with The Guardian team in Abuja, Director-General of the BPE, Mr. Benjamin Dikki, stressed that once the verification exercise being conducted by NERC is completed, some of the remaining Federal Government shares in the utilities would be allocated to states.

  On some of the utilities post-privatisation, Dikki said: “There are a number of categories. One is the hydro-electricity power plants category, which are Kainji, Jebba and Shiroro. They were not sold. Concessions were granted to the investors for a period of 20-25 years.     We cannot sell the hydros because there is water. There are natural assets. If you sell them, you are selling the land, which belongs to the generality of Nigerians. What we did was to grant them concessions to use the water and produce power for a period of 20-25 years.

  “So, hydros have not been privatised. They have only been concessioned out. 

  “The second category are those gas fired plants that are so old. Some of them were built in the sixties. Government decided that if we want to retain shares in these old plants that are already outdated (let’s put it that way), there would be end for us to make investment. Why don’t we sell those plants 100 per cent so that the new investors will have the impetus to go and find the funds to make the necessary investments? So, such plants like Ughelli and Afam were sold 100 per cent.

  There are other plants that are newer like Geregu, which was sold 51 per cent. Egbin was sold 70 per cent. So, government still had 30 per cent.” 

  He added: “The next category is the distribution companies. Government sold only 60 per cent of the stakeholding in all the distribution companies.  So, government still retains 40 per cent. Now, that 40 per cent is intended that members of staff would have some shares. State governments that have investments in power infrastructure would have their investments valued and they will be given a share holding out of this 40 per cent. Whatever the balance is will then be brought to the capital market through a public offer and shares would be offered to the generality of Nigerians so that they can also take the dividends of democracy and also share in the transformation agenda of the President Goodluck Jonathan Administration.”

  On when the process of disposing of the shares would start, Dikki noted: “The process will start when we assess that these companies have stabilised and are making profit. If we sell the shares now, there is a risk that it may take some time before these companies begin to return profit and pay dividends. We don’t want to run into a situation where we sell shares to Nigerians and they spend five years without dividends and people begin to accuse government of selling them a bad investment.

  “We are going to allow the companies some time to stabilise. And I want to remind you that there has been little investment in improving the power infrastructure over the last 50 years.  These people need to make investment. The new investors need to make investments and stabilise it. Once the system stabilises, then we will be able to project the profit.”

  “We have technical losses in transmission and technical losses in distribution. So, there is a financing gap; you don’t want to sell such shares to the public when these kinds of challenges are there. You want the market to stabilise. We now wait for the declaration of the Transitional Electricity Market (TEM) before these things will come on stream,” he stressed.

  He added: “The state governments equities are being valued. Their investments are being valued by the NERC. As soon as NERC completes the evaluation of the investment made by each state, we shall begin to allocate shares to them. The challenge NERC is facing is that many of the states have not responded positively by giving the commission information.

  “What NERC requires is, for instance, states saying that they have installed some transformers, and they need to tell us where the transformers are and further provide evidence that they purchased the items. It must be something that we can verify and audit. We also need the price at which the items were bought, and all those kinds of variables that go into evaluation.

  Now, some states have co-operated, but some have not. I want to appeal to the state governments that have not responded to do so that we can expeditiously allocate the shares to them and move on”, he added.

Source:PunchNewspaper.