CESC seeks power play in Nigeria

CESC Ltd, the power utility owned by the RPG Group, is going global.

The Kolkata-headquartered company, currently expanding in the country, has put in bids for acquiring majority stakes in multiple state-owned power plants and distribution companies being privatised in Nigeria.

Sanjiv Goenka, vice-chairman of CESC Ltd, confirmed the development on Monday. “We have shown interest in the privatisation of companies created by unbundling the Power Holding Company of Nigeria (PHCN) and we have submitted our bids,” he told DNA.

A successful bid would mark CESC’s maiden foray into the power sector overseas. As of now, its sole presence beyond the borders is through stake in a coal mine in South Africa.

The Nigerian government is currently undertaking a massive privatisation programme involving sales of a majority 51% stake in four thermal generation plants, three hydro power plants and 11 distribution companies, all carved out of unbundling of state-owned PHCN.

Nigeria has an installed generation capacity of 8,644 mw, of which 6,905 mw is owned by PHCN. The company plans to take its capacity to 26,561 mw in the next nine years as part of a Vision 2020 plan.

This capacity, however, suffers heavy losses due to low utilisation and poor maintenance. Thermal power generation is at 50% of installed capacity, the state power department has disclosed.    

Nigeria had organised roadshows in Lagos, Dubai, London, New York and Johannesburg over January and February.

Following this, expressions of interest (EoIs) were invited, and as of March-end, the Bureau of Public Enterprises had received a total of 331 applications. The EoIS are currently being evaluated by a team of consultants that includes several leading global merchant banks.

Privatisation of all the 18 successor companies of PHCN is expected to be concluded by May, according to the director general of the Bureau of Public Enterprises.

CESC, however, is not the only Indian company among the applicants. The power distribution subsidiary of Gujarat government-owned Gujarat Urja Vikas Nigam Ltd and Adani Power Ltd are some of the other Indian companies believed to be in the fray, though this couldn’t be independently confirmed from these companies.

The main attraction for these players is the vast untapped opportunity in the Nigerian power sector, so far monopolised by the inefficient state-run PHCN and the various incentives being offered to make the privatisation process attractive and successful. The incentives include deregulation of generation tariff in the long run, tax holidays, duty exemption for equipment, partial risk guarantees and resolution of labour related liabilities before handover, according to CESC officials involved in the bidding process.