The Federal Government has concluded plans to complete the sale of three electricity generation companies (Gencos) built by the Niger Delta Power Holding Company (NDPHC) under the National Integrated Power Projects (NIPPs) to help fund the projected deficit in the 2018 budget.
Speaking to BusinessDay in an exclusive interview, the Director-General of the Bureau of Public Enterprises (BPE), Alex Okoh, confirmed that the government has identified the core investors for the three NIPPs, and is in the process of signing the share sale agreement with the core investors after which they can then call for the for the payment of those assets that have been identified.
According to him, the share sale agreement will be signed before the end of the year.
He also said the government intends to finally sell all the ten National Integrated Power plants (NIPPs) but is beginning with these three to enable it fund the estimated over N2 trillion budget deficit in 2018.
BusinessDay was told that three of those power plants would be sold between March and April 2018 while the remaining seven would be privatized at a later date.
President Buhari last week sent an N8.61 trillion 2018 proposed spending plan to the National Assembly for approval. The budget estimated an overall deficit of N2.005 trillion, representing 1.77 percent of the nation’s GDP, which is still within the threshold stipulated in the Fiscal Responsibility Act (FRA) 2007.
Government intends to fund the deficit mainly by borrowing N1.699 trillion, and plans to source N850 billion domestically and N849 billion from international sources. Minister of Budget and National Planning said on Tuesday that a total of N306 billion is expected from privatization proceeds of non-oil assets confirming Buhari’s earlier disclosure.
Okoh, the BPE DG confirmed to BusinessDay that the ten NIPPs will be sold eventually, but that the government is about to close the financial deal for three of them next year, and that the proceeds are already captured in the budget.
The Nigerian National Integrated Power Project (NIPP) was conceived in 2004 under President Olusegun Obasanjo’s regime to address the issues of insufficient electric power generation and excessive gas flaring from oil exploration in the Niger Delta region. But administration changes in 2007 interrupted funding for more than two years and the plants faced huge issues of gas supply to take off operations.
BusinessDay learnt that the three plants that will be put up for sale include; the 634 megawatts (MW) Calabar, 1,076MW combined cycle Alaoji, and 506MW Geregu. According to Okoh, earlier constraints to their sale have largely been sorted.
He said that the government approved their privatisation following the resolution of huge issues around the transmission and gas supply constraints that had affected the plants.
“I think I can tell you one set of assets that we are looking at raising revenues to fund the deficit and those are the National Independent Power Plants NIPP, It is the proceeds from the three of them that constitutes the our contribution to meeting the budget deficit for 2018, we have started the process of selling these assets, but we are not going to achieve financial close till about a March, April next year.”
He also confirmed that there are a couple of other transactions in the pipeline but are not in the public purview.
“That is why is am not able to give you the full details. But the pipeline of those assets to be sold have already been identified,” he said.
Onyinye Nwachukwu, Abuja