The Bureau of Public Enterprises (BPE), acting on behalf of the Federal Government, is currently in the process of selling five power plants under the National Integrated Power Projects (NIPP), with a targeted transaction value of about $1.15 billion, as revealed on Tuesday.
While sources familiar with the matter suggest that the international benchmark for the cost of these plants should exceed $5 billion, the BPE is reportedly planning to sell them at a price slightly above $1.1 billion. The acting Director-General of BPE, Ignatius Ayewoh, confirmed the ongoing transaction but did not disclose specific details, citing that the process is not concluded.
The five power plants in question are the 434 megawatts gas-fired Geregu II power plant in Kogi, the 451MW Omotosho II plant in Ondo, the 750MW Olorunshogo II plant in Ogun State, the 563MW Odukpami power plant in Calabar, Cross River State, and the 451MW Benin-Ihovbor plant in Edo State.
Insiders at the BPE disclosed tentative sale prices for some of the plants, with the Omotosho plant estimated at $85 million, Olorunsogo NIPP at $170 million, Benin-Ihovbor at $420 million, Calabar Odukpami at about $260 million, and the Geregu plant at $215 million. These figures are attributed to Siemens turbines, each capable of generating about 115MW of electricity.
The BPE’s approach to valuing the plants has been criticized, as it contrasts with an estimated construction cost of $1 million per MW. If valued on this basis, the five NIPP plants could surpass $5 billion.
The sale of these power plants has been a long-debated topic, gaining momentum in December 2022 when the Federal Government and state governors reached an agreement to sell the NIPPs and utilize the proceeds for the 2023 budget. The NDPHC, responsible for managing the NIPPs, is jointly owned by the federal, state, and local governments.
While previous estimates projected the sale to generate over N260 billion (around $600 million), the finalization of the sale remains uncertain, with the acting DG of the BPE emphasizing that the transaction is ongoing and not concluded. The Niger Delta Power Holding Company has not confirmed the sale either.
The complexities surrounding the sale and the varying estimates highlight the challenges associated with privatizing critical assets in the power sector, with stakeholders closely monitoring the developments amid ongoing discussions.