FG Cedes Olorunsogo Power Plant to Chinese Firm
16 Feb 2011


History was made Tuesday as the Federal Government handed over the Olorunsogo Power Station in Ogun State to a consortium led by Sepco III Electric Power Construction Corporation of China and an indigenous company, Pacific Energy—the first under the Power Roadmap of the administration.

This is in line with its decision to cede its controlling stakes in electricity generation and distribution to private investors under the privatisation programme.

The choice of the Chinese firm in the sale of the power station stemmed from the inability of the Federal Government to repay the loan provided by the Chinese government for the construction of the plant.

The Chinese government provided the 65 per cent funding for the 335-megawatt-capacity Olorunsogo plant and the 335-mw-capacity Omo-tosho Power Station in Okitipupa Local Government area of Ondo State.

The loan was provided through the contractors for the projects - Sepco III Electric Power Construction Corpo-ration and China National Machinery & Equipment Import & Export Corporation -  for Olorunsogo and Omotosho plants, respectively.

Minister of State for Power, Mr. Nuhu Wya, said while handing over the Olorunsogo plant that the final documents for the transaction would be signed later this week by the Bureau of Public Enterprises (BPE) and the Chinese firm.

"We have resolved today that in line with Federal Governm-ent's divestiture policy from the generation and distribution aspects of electricity supply, we have reaffirmed to Sepco that they are the core investors for Olorunsogo Power Plant. They will manage this plant; work with our existing Nigerian workers to ensure that power is delivered to Nigerians with effect from tomorrow (today). We have agreed and they have assured us that they have repaired seven out of the eight turbines and they are ready to be fired. By tomorrow (today), we expect to get at least 200 megawatts from Phase 1 of Olorunsogo Power Plant," he said.

The minister assured the workers that they would not be dismissed on account of government's divestiture and appealed to them to render their loyalty and commitment to the new management of the power station for the overall development of the power sector.
He said the government approved the sale of the plant to the new investor due to the fact that the Chinese provided 65 per cent of the funding, while the Federal Government contributed the remaining 35 per cent.

Wya disclosed that the BPE was putting finishing touches on the privatisation documents to be signed at a later date.
"But for the expediency of geting the plants running, I have today handed over a letter to Sepco to ensure that they commence full operation of this plant with effect from tomorrow (today). The agreement does not cover Phase 2 because Phase 2 is National Integrated Power Project (NIPP), which is jointly owned by the Federal and state governments," he said.

He however noted that the divestiture plan for Phase 2 was being worked out, adding that a competent managing firm would take over the plant in due course.

Following the inability of the Federal Government to repay the loan for the two plants, the contractors were said to have left with the manuals and other documents relating to the running of the plant, while the few documents left to help Nigerians to manage the plant were written in Chinese.

The minister noted that this development might have contributed to the inability of Nigerians to successfully run the plants.
"It is not written anywhere but I believe that it sounds very logical. A contractor who is being owed will guard jealously his fallback position and these are issues we are trying to unravel and solve once and for all. You heard the plant manager for Omotosho saying that most of the catalogues are in Chinese language. The cards for the operation are also not there," he added.

Chairman of the Kepco-Pacific Energy Consortium that acquired the Olorunsogo Plant, Dr. Deji Adeleke, said seven out of the eight units were operational. He however stated that only two units were running, generating 105 megawatts of electricity.

"It is now left for us to prove ourselves because the government has done their own. We have to show that the private sector can make things work in the power sector just like the telecoms sector. We will have a meeting with BPE on Thursday and hopefully, we will sign the Memorandum of Understanding (MoU)," Adeleke said.

The minister also disclosed that the government was discussing with the Chinese contractor that built Phase 1 of the 335-megawatt-capacity Omotosho Power Station, which is currently generating about 30 megawatts to take over the station.

"The negotiation for Phase 1 of Omotosho has not gone very far. I will not want to make announcement until negotiations are concluded," he said.

Phase 2 of Olorunsogo, which is NIPP project has a capacity to produce 750 megawatts on completion, while phase 2 of Omotosho, which is under construction, will generate 500mw.




http://www.thisdaylive.com/articles/fg-cedes-olorunsogo-power-plant-to-chinese-firm/86317/

this may be the first time there will be a legitimate increase in power supply. Let's see if people will notice effects.

The effect of this deal may only be felt in a particular region

D capacity is low and cld nt b felt everywhere.

^^
Very correct