Q1 2019: FG plans sale of Afam Power, Yola Disco

The Federal Government plans to realise the sale of Afam Power Plc and Yola Electricity Distribution Company in the first quarter of 2019, investigation has shown.

The Bureau of Public Enterprises had in September constituted an inter-ministerial committee for the screening of prospective investors who had expressed interest in the acquisition of 60 per cent stakes in the two companies.

Head, Public Communications, Amina Othman, said the BPE had in September confirmed that at the close of the submission of bids for the Expression of Interest for the two power companies, seven firms submitted bids to buy Afam while 12 submitted for Yola Disco.

Othman said within the period allowed for Expression of Interest, 19 firms including renowned players in the power industry had indicated interest to acquire majority stake the two power firms carved out from the defunct Power Holding Company of Nigeria.

Our correspondent learnt that although the privatisation had worked towards selling the two companies in December, it is now working towards achieving the target in the first quarter of 2019.

According to the Director-General of BPE, Mr Alex Okoh, the sale of the two companies is expected to contribute N400bn towards funding the 2018 budget of the Federal Government. The implementation of the budget continues till May 2019.

For both Afam Power Plc and Yola Disco, the current effort towards privatisation is a repeat exercise.

With a bid of $260.05m, Taleveras had on July 31, 2013, beaten TES Power to emerge the preferred bidder for Afam Power Plc, the last of the generating companies carved out from the defunct PHCN.

On December 23, 2013, Taleveras signed a Power Purchase Agreement with BPE for Afam but the transaction could not be concluded because of the inability of the government to sign a gas supply agreement with the company. Thereafter, the exercise was stalled.

On the other hand, following difficulty in running the Yola Disco due to activities of the Islamist terror group, Boko Haram, Integrated Energy and Distribution Marketing Company had asked the government to buy back its stake in the electricity distribution company.

The former core investor in Yola Electricity Distribution Company had on six occasions (November 10, 2013; August 27, 2014; October 15, 2014; April 9, 2015; April 30, 2015, and May 13, 2015) given notice of force majeure to the government.

The force majeure clause is a standard clause in most contracts and includes events like natural disasters, wars and other occurrences not within the power or control of the executing party that makes implementation of a contract impossible.

Clause seven of the Share Purchase Agreement stated that in a war situation where the core investor could not operate, it could invoke force majeure on issues beyond its control.

The Yola Electricity Distribution Company covers Adamawa, Borno, Taraba and Yobe states. Three of the states of coverage, Adamawa, Borno, and Yobe, had been most affected by the war against the Islamist insurgency.

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