Monday, October 22, 2012

Privatizing power in Nigeria

Nigeria sits upon the seventh largest deposit of oil in the world. Still, getting enough power to the people is a daily problem, with blackouts being an everyday occurrence. Nigeria only generates one tenth of the power that South Africa does, while having a bigger population.

So the Nigerian government is beginning an ambitions plan to privatize all of their power concerns. This brings with it another wave of worries and criticism. Power oligarchs that have gotten rich off of government contracts are in the front of the bidding process. Many of these same oligarchs have no expertise in power. Despite the concerns, Nigeria might have to proceed with them.

From Reuters Alert Net, writer Joe Brock tells us more.

As with Russia in its 1992-1994 sell off of state assets, it is entrenched political and business elites who look set to win much of Nigeria's power sector, even while Western aid agencies are backing the process with tens of millions of dollars.
The government announced preferred bidders for 10 power distribution firms this week and has approved bids for five power plants, a major step forward. But already the companies who lost out and labour unions have said the process was fraudulent and the results to be scrapped.
The wealthy figures behind the consortia bidding already control vast stakes in Nigeria's economy and political machine, and many of the assets only had one approved bidder each. It is often felt that since the oligarchs have such sway in Nigeria, it is better to have them in the process rather than outside it.
In past Nigerian privatisation efforts, unqualified bidders and political wrangling caused years of legal battles and delays after assets were awarded. Sometimes funds were diverted to people who failed to revive the firms and left debts unpaid.

The Power Holding Company of Nigeria is being sold as six generation firms and 11 distribution companies. A contract for transmission has been given to Canadian firm Manitoba Hydro.
Among the figures angling for a slice of privatised power is billionaire businessman Emeka Offor. His company Chrome Group is the highest bidder for firms in the capital Abuja and Enugu.
Offor made his fortune from government contracts, especially under military dictator Sani Abacha in 1990s.
Between 1999 and 2002, Chrome Group worked on a $100 million contract for maintenance on Nigeria's Port Harcourt oil refineries, in Africa's biggest oil industry. They have operated at just 30 percent capacity since, and the state oil firm has said the work was not done properly.
"The turnaround maintenance was successfully completed and duly handed over to Port Harcourt Refining Company," Chrome Group spokeswoman Val Oji wrote in an email, with the relevant completion certificates attached, when asked about it.
Global Witness, a UK-based watchdog, investigated Offor's Seychelles-registered oil firm Starcrest in February. It said it won an oil block in 2006, then within months signed Swiss firm Addax on as 'technical partner' for a $35 million fee.
That deal left Starcrest with a big minority stake, and Addax, the firm with the expertise to produce the oil, paid a $55 million signature bonus. Offor told the NGO that Nigeria's financial crimes commission had cleared Starcrest of wrongdoing.
The deal resembles arrangements common in Nigeria, in which a company r un by a local oligarch 'partners' with a foreign firm with the know how, and takes a cut.

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