August 5, 2013

Privatisation: Peterside explains use of ATC & C for bidders


At the opening of Financial Bids for Kaduna Distribution Company (DISCO) and Afam Generation Company (Genco) which held on July 31, 2013 in Abuja, Northwest Power Ltd had the highest Aggregate Technical Commercial and Collection Loss reduction (AT&C) of 29.26 % with respect to Kaduna Disco while Taleveras Group emerged the preferred bidder for Afam Genco with an offer price of $260,050,000.

The Reserved Bidder for Afam plant is TES Power which had an offer price of $222,900,000. The ATC & C Loss Reduction proposal by the other bidders for Kaduna Disco are LEDA Consortium (26.71%), NAHCO Consortium (22.83%), Incar Consortium (22.73%), Copper belt Consortium (21.07%) and Axis Power Distribution Ltd (17.40%).

Chairman of the Technical Committee (TC) of the National Council on Privatisation (NCP), Mr. Atedo N.A. Peterside who presided over the bids opening said the results are subject to NCP’s final approval.

The Chairman noted that: “For Kaduna Disco we are seeking to establish which bidder is offering the highest aggregate technical commercial and collection loss reduction figure (ATC &C).

He added that the use of ATC&C method is a clear departure from NCP’s usual practice of awarding companies to the bidder who makes the highest financial offer after being technically qualified.

Peterside noted that the NCP had done its very best to ensure that the level of transparency that heralded the previous sale of 15 companies was maintained in the sale of Afam Power Plc and Kaduna Electricity Distribution Company Plc. “Accordingly the NCP is confident that this process will produce the most appropriate core investors and fulfil the government objectives of rapid transformation of the electric power sector”, he added.

Earlier, the Director General of the BPE, Mr. Benjamin Ezra Dikki said that the event was another testimony of the success of the Reforms of the Power Sector that began with the constitution of the Electric Power Sector Implementation Committee (EPIC) by the NCP to undertake a comprehensive study of the electricity power industry.

“The reform initiatives resulted in the preparation of a power policy blueprint that defined government’s new direction for the electric power sector that culminated in the production of the National Electric Power Policy (NEPP) in March 2001 and approved by the Federal Executive Council (FEC) in September 2001. The reforms of the power sector were however stalled until it was reinvigorated by the Transformation Agenda of the Goodluck/Sambo administration”, he said.

The BPE boss noted that with the over one hundred submissions received for the NIPP plants less than two weeks ago and the quality of the bidders, “we can beat our chests and say the Power Sector reforms have succeeded.  Our dream to introduce a better operating environment that is efficient, effective and well-regulated and enticing to private sector participation has become a reality. The participation of the private sector should bring about higher generation capacities through the provision of more efficient and cost-effective power stations and improvements in the distribution sector in the areas of billing and collection, distribution networks”.

He recalled the imperatives that fuelled the need for the reforms in the telecoms and power sectors among others and stated that they were more compelling today than before.

“The revenue profile of government when matched with the ever increasing demands on these resources should compel us to vigorously pursue the reforms in the other critical sectors of the economy like the transport and oil and gas sectors, seeing that we have made a huge success of the reforms in telecoms, power and pension. The Bureau should be commended for driving these reforms that have so clearly impacted on the economic fortunes of this country. The Bureau also solicits the support of all as it collaborates with Ministries and Agencies to undertake other reform initiatives in Housing, Transport and Agricultural Sectors among others.’

He added that with the bids opening, the preferred bidders will be given a timeline to pay and takeover the enterprises.

It would be recalled that the Kaduna Electricity Distribution Plc (Kaduna Disco) and Afam Power Generation Plc (Afam Genco) were among the 17 PHCN successor companies that were advertised for sale in December 2010. Both companies along with fifteen others went through a full competitive tender process which culminated in the submission of technical and financial proposal in July 2012.

However, following the rigorous technical evaluation of all the bids,  none of the bids received for Afam Power Plc and Kaduna Electricity Distribution Plc scored the minimum 75% required to progress to the financial bid stage. This development compelled the National Council on Privatisation (NCP) to order a re-run of the entire transaction as it was not prepared to settle for a sub- optimal outcome

However, in order to fast track the process, NCP directed that no fresh adverts would be put out but instead all prequalified bidders who had earlier expressed interest in the power privatization and paid the US$ 20, 000 data room fees would be allowed to participate in the exercise.

Following NCP’s directive, letters were sent to all the 163 bidders asking them to indicate their interest by submitting fresh bids for Kaduna Disco and Afam Genco.

By January 31st, 2013 which was the deadline for interested bidders to indicate their interest, 29 bidders indicated interest in Afam Genco while 19 bidders indicated interest in Kaduna Disco.

Requests for proposals (RFP) were subsequently forwarded to all the bidders and they were given up to April 16, 2013 to conclude their due diligence and submit Technical and Financial proposals.