In a significant development for Nigeria’s power sector, the Federal Government, through the Bureau of Public Enterprises (BPE), is progressing with the sale of five power plants under the National Integrated Power Projects (NIPP). The transaction, valued at approximately $1.15 billion, marks a critical step in the nation’s efforts to revitalize its energy infrastructure.
Despite the international benchmark suggesting a valuation exceeding $5 billion for such assets, the BPE plans to sell these facilities for just over $1.1 billion. Ignatius Ayewoh, the acting Director-General of BPE, confirmed the ongoing nature of the transaction but refrained from disclosing specific financial details.
The power plants slated for sale include the 434 megawatts gas-fired Geregu II plant in Kogi State, the 451MW Omotosho II plant in Ondo State, and the 750MW Olorunshogo II plant in Ogun State. Additionally, the sale encompasses the 563MW Odukpani plant in Calabar, Cross River State, and the 451MW Benin-Ihovbor plant in Edo State. The individual pricing for these plants has been outlined, with costs ranging from approximately $85 million to $420 million each, depending on their capacity and infrastructure.
Sources familiar with the matter highlighted the high-quality Siemens turbines each plant possesses, capable of generating around 115MW of electricity. They further elaborated on the cost of constructing power plants, noting that for a 1MW capacity, the investment ranges from $1 million to $2 million, depending on the type of plant and its location. This would suggest that the total value of the NIPP plants could far exceed the current sale price.
This move comes following a decision made in December 2022, where the Federal Government and state governors agreed to sell these power plants and use the proceeds to fund the 2023 budget. The agreement, reached after over two years of disputes and legal tussles, involves the Niger Delta Power Holding Company (NDPHC), a joint venture owned by federal, state, and local government councils.
The sale of the NIPP plants has been a topic of discussion for several years. In April 2021, the National Council on Privatisation approved the sale through a fast-track strategy, although the specific details and target sale amount have evolved over time. In March 2022, the Nigerian National Petroleum Corporation expressed interest in acquiring some of the NIPP plants, indicating progress in the sale process.
While the BPE acting DG confirms that the sale is not yet finalized, the transaction’s completion is expected to generate substantial funds. However, some sources and civil society organizations have raised concerns about whether this amount will significantly impact the rising budget deficits. As of now, the Niger Delta Power Holding Company, which manages the NIPPs, has not confirmed the sale.
The sale of these power plants is a pivotal moment for Nigeria’s power sector, potentially ushering in a new era of energy efficiency and infrastructure development. It represents a strategic move by the government to revitalize a crucial sector while addressing budgetary challenges.