Sales of the 18 successor companies to the much-maligned state Power Holding Company of Nigeria, which was broken up in January, could give local banks opportunities in financing: firstly for the acquisitions and then for the rehabilitation of the dilapidated assets.
According to an adviser to one of the bidders, more than 500 local and international companies – from Brazil, Finland, France, India and elsewhere – have expressed interest in buying one or more of the generation and distribution assets. After an initial pre-qualification round, this number might now have fallen to around 250 interested parties, with a second round scheduled for the spring.
CPCS Transcom, a Canadian infrastructure consultancy with experience of working in Africa, is advising the government on the process, according to one of the advisers on the buy side.
However, banks are by and large discounting loans to the electricity sector from their loan-growth projections, at least for this year. The number of bidders is one indication of the complexity of the process and how likely it is to encounter delays. One adviser to a bidder says unreasonably high initial indications on price have put off buyers.
An even bigger issue is the tariffs the new firms will be able to charge – something that could bring strikes and protests similar to those that crippled the country for a week in January after the removal of the petroleum subsidy.