It was discovered on Tuesday that the Bureau of Public Enterprises, acting on behalf of the Federal Government, is presently engaged in conducting deals to sell off five power plants associated with the National Integrated Power Projects. This transaction is estimated to amount to approximately $1.15 billion. Sources familiar with the project’s progress have indicated that the plants’ estimated value, following an international benchmark, is estimated to surpass $5 billion. Surprisingly, it has been disclosed that the BPE intends to sell the facilities at a marginally higher price of just over $1.1 billion.
Ignatius Ayewoh, the current Acting Director-General of BPE, confirmed that the transaction is still in progress and emphasised that it has not been finalised yet. However, Ayewoh, who mentioned being in a meeting, regretfully couldn’t provide any additional information or disclose the cost of the five plants. Moreover, the bureau, relying on credible sources, provided a list of five power plants, which encompass the 434MW Geregu II power plant situated in Kogi; the Omotosho II plant in Ondo generating 451MW, as well as the Olorunsogo II plant in Ogun State with a capacity of 750MW. Other power plants in Nigeria consist of the Odukpani facility in Calabar, Cross River State, producing 563MW, and the Benin-Ihovbor plant in Edo State, generating 451MW.
Various power plants with huge capacities are identified.
Reports indicate that the Omotosho plant, equipped with four power generating turbines, could be acquired for approximately $85m, while the Olorunsogo NIPP plant, also with four turbines, is priced at $170m. One of the undisclosed sources mentioned that the Benin-Ihovbor plant, equipped with five electricity-generating turbines, has a price tag of $420 million. Similarly, the Calabar Odukpani plant, equipped with five turbines, is expected to sell for approximately $250 million. Lastly, the Geregu plant, hosting four turbines, is valued at $215 million. It is worth noting that these Siemens turbines can generate approximately 115MW of electricity each. The official proceeded to elaborate on the cost estimates, indicating that the construction of a power plant capable of producing 1MW of electricity would cost $1m.
Also, the official highlighted the staggering fact that if the valuation of all five NIPP plants were based on this metric, the cumulative cost would exceed $5bn. The cost of building a 1MW power plant is influenced by various factors, such as the type of power plant, its location, and technological advancements. However, it is generally estimated that a solar power plant may cost between $1m to $2m per MW, while a wind power plant may range from $1.5m to $2.5m per MW. According to another source in the industry, the cost of generating power from natural gas-fired plants, like the NIPPs, ranges from $1m to $2m per MW. Conversely, coal power plants are estimated to cost between $2m and $3m per MW.
National Council on Privatisation approved the expedited sale of five NIPPs
Furthermore, the federal government and the governors of all 36 states reached a decisive consensus in December 2022. Their determination involved the sale of the five power plants belonging to the National Integrated Power Projects, creating financial resources to back the 2023 budget. After more than two years of conflicts and legal battles, the parties involved finally established a mutual understanding in December regarding the sale of the NIPP plants. These plants are currently under the management of the Niger Delta Power Holding Company (NDPHC), a power generation and distribution firm owned by federal, state, and local government councils.
The NDPHC is responsible for supervising the implementation of the NIPPs. During an interview in Abuja, Alex Okoh, the former Director-General of the Bureau of Public Enterprises, revealed details regarding the NIPP plants agreement between the Federal Government and the states. However, opposed by various groups, the Bureau of Public Enterprises has been engaged in talks and strategising for the divestment of the NIPPs for several years. Throughout this period, the intricate particulars and desired sale values have undergone development. In April 2021, the National Council on Privatisation approved the expedited sale of five NIPPs. However, the estimated worth of these specific plants was not revealed to the public. Also, the Nigerian National Petroleum Corporation revealed its intent to obtain some NIPPs in March 2022, showcasing advancement in the sale.
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Confirming a deal between the Federal Government and states, Okoh, the former BPE boss, announced in December 2022 that five NIPPs were up for sale. He estimated the transaction to yield over ₦260bn (approximately $600m). Despite the doubts numerous sources and CSOs raised regarding its efficacy in addressing the escalating budget deficits at the time, this sum was deemed inadequate. According to the statements of the acting DG of the BPE, the sale of the NIPPs remains unresolved. Furthermore, the Niger Delta Power Holding Company, responsible for managing the NIPPs, has yet to validate any agreement regarding their sale. Meanwhile, despite the absence of an official confirmation regarding the expenses related to the NIPPs, certain sources propose that the preliminary approximations for each NIPP might have spanned from $300m to $500m.