* Power outages hold back economic growth
* President Jonathan has made power reforms priority
* Political interference, lack of financing major risks
(Adds details, background)
By Joe Brock
ABUJA, Sept 25 Nigeria announced on Tuesday the
preferred bidders for five state power generation plants, part
of plans to privatise the country's electricity sector to boost
growth in Africa's second largest economy.
Despite holding the world's seventh largest gas reserves,
Nigeria only produces around 4,000 megawatts (MW) of electricity
for its 160 million people, less than a tenth of the amount
South Africa provides for a population a third of the size.
In 2010, President Goodluck Jonathan announced plans to
break up the state power company and sell it off as 11
distribution and six generation companies. He has promised a
marked improvement in power output next year.
The highest bidders for the electricity distribution
companies are due to be announced on Oct. 16.
"This is a milestone in the power privatisation process,"
Minister of State for Power, Darius Ishaku, said at a ceremony
announcing the winners for generation firms in Abuja.
"I'm sure each and every one of you would agree the process
has been transparent," he told a room of bidding firms.
A consortium including Nigerian firm Transcorp
was the highest bidder for the Ughelli Power company, offering
$300 million, while Geregu Power plant was won with a bid of
$132 million by a group which includes Forte Oil, a firm
majority-owned by Nigerian billionaire oil tycoon Femi Otedola.
A consortium made up of Nigerian, Chinese and British
companies is set to buy the Sapele Power firm for $201 million.
Mainstream Energy, a group including Russian firm RusHydro
and several Nigerian companies won a contract to manage the
Kainji Power company and North-South Power, a mostly Nigerian
consortium, won a similar contract on Shiroro Power.
Mainstream and North-South had no competitors for their
bids, raising question marks over the legitimacy of the sales.
There are also concerns over financing difficulties after
the Nigeria's central bank banned loans to 113 firms this week
for failing to pay previous debts. These include Forte Oil and
other firms bidding for power assets.
The sale of the remaining generation firm, which will run
the Afam power plant, is being re-tendered after the Power
Minister Barth Nnaji resigned last month when it was revealed he
had a stake in one of the consortiums bidding for the asset.
If Nigeria can fix its electricity problems it could launch
Africa's second largest economy into double-digit growth and
help pull millions out of abject poverty.
But corruption, mismanagement and the strength of vested
interests mean despite an estimated $40 billion of capital
injected into reforming the power sector over the last two
decades, capacity has only improved marginally.
(Writing by Joe Brock. Editing by Jane Merriman and Louise