Power: FG hands over Olorunsogo plant to Chinese investors

By Martin Ayankola

Wednesday, 16 Feb 2011


The Federal Government has announced the handover of the 335-megawatt Olorunsogo Phase 1 Power Plant to a consortium of Chinese and Nigerian companies, SEPCo-Pacific Energy.


The transaction marks the first successful sale of a government-owned power company to a private investor under the Federal Government’s road map for the power sector.


However, the new ownership structure of the plant is being worked out by the Bureau of Public Enterprises, based on facts and figures to be tabled by the Federal Government and SEPCo.


Initially, the government had provided 35 per cent funding for the construction of the project, while SEPCo helped raise 65 per cent credit financing from Chinese banks for the completion of the project.


But because the government had been unable to service the loan, it decided to turn the debt into equity for the consortium.


The Minister of State for Power, Mr. Nuhu Wya, who presented the handover letter to the consortium on Tuesday, at the power plant, however, explained that the agreement only covered the first phase of the plant.


He said, “The Federal Government has long approved the divestiture of this plant to the Chinese for the fact that they own 65 per cent of this plant and the Federal Government owns 35 per cent. The BPE is, however, putting finishing touches to the divestiture plans and policies and this formal agreement will be signed at a later date, but for the expediency of getting the plant started. I have today handed a letter to SEPCO to ensure that it commences full operation of this plant with effect from tomorrow (Wednesday).


“In line with the Federal Government’s divestiture policy from the generation and distribution aspect of electricity development, we have reaffirmed to SEPCO that they are the core investors for the Olorunsogo Power Plant; they will manage this plant and work with existing Nigerian workers to ensure that power is delivered to Nigerians with effect from tomorrow (Wednesday).


He added, “So, we have agreed, and they have assured us that they have repaired seven of the eight units and they are ready to be fired. So, by tomorrow (Wednesday), we expect at least 200MW from phase one of Olorunsogo Power Plant. I want to seize this opportunity to assure workers of this plant that nobody will be dismissed on account of this decision today. I appeal to them to remain loyal to the new management of the power plant.”

http://www.punchontheweb.com/Articl.aspx?theartic=Art201102162364562