The privatisation process of the ten gas-fired power plants under the National Integrated Power Project (NIPP) in Nigeria seems to have hit a snag, stalling progress on the sale of the assets.
The NIPP asset sale, which marks the second wave of privatisation in the Nigerian power sector, entails a divestment of 80 percent equity in the assets and is expected to generate about $6 billion for the government. The successor companies carved out of the defunct state-owned Power Holding Company of Nigeria (PHCN) were privatised in 2013.
Last year, the Niger Delta Power Holding Company (NDPHC), owners of the NIPP assets, had run a series of road shows in Lagos, London, New York and Hong Kong to generate interest in the sale of the power plants.
On March 21, this year, the Joint Transaction Board (JTB) comprising the National Council on Privatisation (NCP) and NDPHC had approved the preferred and reserved bidders of seven out of the 10 NIPP power plants.
According to the timelines unveiled in June 2013, the handover of the 10 NIPP plants was scheduled for June 2014.
It has been reported that the non-completion of some of the projects and pending litigations are factors affecting progress on the privatisation.
The delayed privatisation process of the NIPP may dent investor confidence in the power sector, said Bismarck Rewane, chief executive officer of research firm, Financial Derivatives Company Limited.
The NIPP generation portfolio comprises 10 gas-fired power plants with a combined capacity to generate 4,774 megawatts (MW) of electricity.
The 10 gas-fired plants include Gbarain (254MW), Benin (508MW), Omotosho (513MW), Egbema (381MW), Omoku (265MW), Geregu (506MW), Calabar (634MW), Ogorode (508MW), Alaoji (1,131MW), and Olorunsogo (754MW).
The plants have capacity to generate 4,774 megawatts of electricity, with five out of them reportedly fully or partially operational, as of March 2013.
NIPP was initiated in 2005 to supplement power generation from existing facilities. The proceeds from the sale of the assets would be invested in new hydro stations and transmission grid, according to NDPHC. But it remains unclear when the privatisation would be concluded.