Categories: Business

Consumer Rights Group Kicks Against Proposed Sale of NIPP/NDPHC Power Plants

The Nigeria Consumer Protection Network (NCPN) says the proposed sale of the five National Integrated Power Projects (NIPP) assets by the Bureau of Public Enterprises (BPE) poses a national security risk.

President of the organisation, Kola Olubiyo, in a statement in Abuja, on Monday noted that the planned disposal of the plants under the Niger Delta Power Holding Company (NDPHC), smacked of national assets stripping at a time the President Muhammadu Buhari’s administration is winding down.

The BPE recently pre-qualified 16 firms for the privatisation of the five NIPPs, including Geregu, Omotosho, Olorunsogo, Calabar and Benin-Ihovbor.

But the NCPN said it had seen the records of the firms described as the bidders for the NIPP plants, maintaining that some of the firms hardly have any experience in the business of power generation.

“The plants under the NIPP of the NDPHC have always been infrastructure providing power supply and national energy security.

“For instance, during the COVID-19 pandemic when the private Generation Companies (Gencos) ramped down electricity generation due to low revenue returns, the NIPPs being public assets, provided Nigeria with the much-needed energy security and its attendant socio-economic stability.

“They increased power supply to avoid economic and administrative shut down in the country.

“The private firms in the power sector so far have not fared better than the NDPHC Gencos which have its gas obligations, gas pipeline assets, contributed to both transmission and distribution networks nationwide,” the group argued.

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Olubiyo, a member of the National Technical Investigative Panel on Power System Collapses/System Stability and Reliability and Presidential Ad-hoc Committee on Review of Electricity Tariff in Nigeria, argued that if at any point other Gencos shut down operations because of legacy debts allegedly owed them, the NIPPS could act as a buffer.

“What BPE and any designated agency of government should be thinking of at the moment is how to optimise the NIPP/NDPHC Gencos so that Nigerians can make the best use of this power sector intervention, as that was what they were designed for.

“The NIPP interventions which cut across the power sector value chain and implemented by NDPHC require that the Nigerian Electricity Regulatory Commission (NERC) would have evaluated them and determined their real value.

“However, for over nine years, NERC has been endlessly doing evaluation of these investment values without result,” the group added.

Without this evaluation to determine the Capital Expenditure (CAPEX) in the NIPP power sector intervention projects, NDPHC, it argued, has been continually short-changed of revolving funds that should be re-invested into other power interventions.

“The NCPN at the moment opposes any move to sell off five of the NIPP Gencos for now. We are not saying that the plants would not be sold at the appropriate prices and time in the future.

“But not now, when Nigeria is seriously battling challenges of deliberate load rejection by the Distribution Companies (Discos) and deliberate low energy dispatch by the Transmission Company of Nigeria (TCN)

“It is already election time and we believe that even if the five NIPP plants are sold, the proceeds may go into the hands of political cronies,” the NCPN stated.

It argued that selling off the five NIPP plants may not guarantee their optimal performance as the new investors will have to begin a fresh journey of having some levels of Power Purchase Agreements (PPAs) and Vesting Contracts with the Nigerian Bulk Electricity Trading PLC (NBET).

However, at the moment, it maintained that the NDPHC has some already signed bilateral contracts for a “Take or Pay” deal for gas supply agreement for some of the Gencos which can come handy.

“We advise the government to join hands with experts and professionals as well as like-minded people within and outside the power sector to come up with a comprehensive mechanism to address the decline in growth.

“As the House of Representatives sit this week to take a deeper look at the issues at stake, the group urged the Special Investigative Committee to look into the basic and fundamental challenges.

“The Nigerian government should also learn from the poor delivery of the 2013 power sector privatisation exercise also carried out by the same BPE,” the group said.

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