Nigerian government to sell five power plants for 1 trillion ($1.15bn)

The Nigerian government has rolled plan to sell off five power plants under the National Integrated Power Projects for a total of about N1 trillion ($1.15 billion).

According to The PUNCH, the transaction is being carried out by the Bureau of Public Enterprises.

It was gathered that the international benchmark for these plants is over $5 billion, the BPE is planning to sell them for just over $1.1 billion.

The acting Director-General, BPE, Ignatius Ayewoh, confirmed the development in a brief telephone conversation that “the transaction is ongoing,” adding that “it is not concluded.”

The BPE boss did not disclose the cost for the five plants, as he quickly stated that he was in a meeting and would not be able to give additional details.

However, impeccable sources at the bureau named the five power plants to include the 434 megawatts gas-fired Geregu II power plant, located in Kogi; 451MW Omotosho II plant in Ondo; and 750MW Olorunshogo II plant in Ogun State.

Others include the 563MW Odukpami power plant in Calabar, Cross River State; and the 451MW Benin-Ihovbor plant in Edo State.

It was gathered that the Omotosho plant, which has four power generating turbines, would be sold at about $85m; while the Olorunsogo NIPP with also four turbines would cost $170m.

The Benin-Ihovbor plant with five power generating turbines would go for $420m; Calabar Odukpami plant with five turbines would be sold at about $260m; while the Geregu plant with four turbines would go $215m.

“These are Siemens turbines and each of the turbine can generate about 115MW of electricity,” one of the sources, who pleaded not to be named due to lack of authorisation, stated.

The official went ahead to explain that it would cost about $1m to construct a plant that could generate 1MW of electricity, stressing that if the five NIPP plants were valued on this basis, they would cost more than $5bn.

It was, however, gathered that the cost of constructing 1MW power plant vary depending on several factors, including type of power plant, location, technological advancements, etc.

“But a general range for the cost of constructing a 1MW power plant based on different technologies is that for a solar power plant, it is between $1m to $2m per MW.

“For wind power plant, it is between $1.5m to $2.5m per MW. For natural gas-fired power plant, such as the NIPPs, it is between $1m to $2m per MW, while for coal power plants, it is between $2m and $3m per MW,” another source in the sector explained.

In December 2022, it was reported that the Federal Government and the 36 state governors finally agreed to sell five power plants under the National Integrated Power Projects and use the proceeds to fund the 2023 budget.

Parties in the deal reached the agreement in December after over two years of disputes and legal tussle as regards the sale of the NIPP plants being managed by the Niger Delta Power Holding Company.

The NDPHC, owned by the federal, state, and local government councils, is a power generation and distribution company that oversees the implementation of the NIPPs.

The former Director-General, Bureau of Public Enterprises, Alex Okoh, had disclosed the agreement between the Federal Government and the states as regards the NIPP plants to journalists in Abuja during an interview. The disclosure was, however, opposed by various groups.

There have been discussions and plans for the sale of the NIPPs by the Bureau of Public Enterprises for several years, with the specific details and target sale amount evolving over time.

In April 2021, the National Council on Privatisation approved the sale of five NIPPs through a fast-track strategy. The estimated value of these five plants was not publicly disclosed at the time.

In March 2022, the Nigerian National Petroleum Corporation expressed interest in acquiring some NIPPs, indicating continued progress with the sale.

In December 2022, the former BPE boss, Okoh, confirmed an agreement between the Federal Government and states for the sale of five NIPPs.

He projected the sale to generate over N260bn (around $600m). However, some many sources and CSOs expressed concerns that this amount wouldn’t significantly impact the rising budget deficits at the time.

As of today, and going by what the acting DG of the BPE states, the sale of the NIPPs has not been finalised. The Niger Delta Power Holding Company, which manages the NIPPs, has also not confirmed its sale.

Meanwhile, it should be stated that while there is no official confirmation on the cost of the NIPPs, some sources speculate that the initial estimates for individual NIPPs could have ranged from $300m to $500m.

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