The National Council on Privatisation (NCP) has approved the privatisation of the 11 distribution companies carved out of the Power Holding Company of Nigeria (PHCN), the Bureau of Public Enterprises (BPE) has said.

The BPE unfolded the approval in a statement signed by its spokesman, Mr Chukwuma Nwokoh, and made available to newsmen on Monday in Lagos. The bureau said that the decision was taken on August 19 at the NCP third meeting in 2010, attended by Vice-President Namadi Sambo.

It said the council also approved that bidders be selected on the basis of efficiency, entailing the reduction of Aggregate Technical, Commercial and Collection (ATCC) losses which they could achieve over a five-year period.  The statement said the NCP approved that any bidder whose bid yielded the highest net present value in terms of consequential benefits should become the preferred bidder.

It said the NCP, in considering the current ATCC losses estimated at between 40 per cent and 50 per cent of the power wheeled to the various distribution companies, believed that such losses were unsustainable.

The council further approved that a minority equity interest be offered to all the states interested in the privatisation of the distribution companies, the statement said.

It said the offer was based on the need to partner with the willing and interested state governments to move speedily and effectively to deal with the emerging transaction and risk issues. The bureau said that without the involvement of the state governments it might be difficult to resolve the issue.

It said the NCP also approved the privatisation strategy for some of the generation companies and their assets, including the PHCN non-operational assets in the Ijora, Lagos, Calabar and Oji River plants.

The BPE stated that the Sapele Power Plc, Afam Power Plc and Ughelli Power Plc divestiture approach would be handled through core investor sale, noting that the privatisation strategy for Kainji Hydro Power Plc and Shiroro Hydro Power Plc was done through concession. The privatisation will be built around the Multi-Year Tariff Order (MYTO), issued by the Nigerian Electricity Regulatory Commission (NERC).

It sets out the commercial and economic indices that provide the financial model for the entire the Nigerian Electricity Supply Industry. The Federal Government approved the National Electric Power Policy in 2001 under former President Olusegun Obasanjo who signed the Electricity Power Sector Reform (EPSRA) Bill into law on March 11, 2005.

The enactment of the EPSRA led to the transformation of the National Electric Power Authority (NEPA) into PHCN Plc as a holding company for the assets, liabilities, employees, rights and obligations of NEPA. In November 2005, 18 new successor companies, consisting of six generation companies, one transmission company and 11 distribution entities were incorporated.