Three years after Taleveras Group paid $64 million for Afam Power Plc, the transaction remains incomplete, raising concerns about Nigeria’s power sector privatization efforts. Despite Taleveras emerging as the preferred bidder with a $260.05 million offer in July 2013, the sale has been hindered by government inaction and the lack of a gas supply agreement.
Investigations have revealed that the Federal Government swept N18 billion from the Bureau of Public Enterprises (BPE) into the Treasury Single Account (TSA), further complicating the privatization process. The move has crippled key activities within the BPE, including the commercialization of key financial institutions like the Bank of Industry, Bank of Agriculture, and Abuja Commodities Exchange.
Funds Seized, PHCN Retirees Affected
The government’s decision to mop up idle funds has also stalled the verification and payment of 1,006 retirees of the defunct Power Holding Company of Nigeria (PHCN). The screening exercise, initially set to hold in Bauchi, Kaduna, Lagos, Benin, Port Harcourt, and Abuja, was put on hold due to a lack of funds in the privatization agency.
The Ministry of Finance, through the Office of the Accountant General of the Federation, withdrew the funds on the grounds that they were idle in an escrow account awaiting the conclusion of the Afam Power transaction. However, this has created an impasse, leaving Taleveras in limbo despite fulfilling its financial obligations.
Gas Supply Agreement Stalls Afam Power Transaction
In December 2013, Taleveras signed a Power Purchase Agreement (PPA) with the BPE for the Afam plant. However, the deal could not be completed because the Federal Government failed to sign a gas supply agreement, a critical requirement for the plant’s operation.
The Taleveras consortium includes:
• Alstom Nigeria Limited – an indigenous power turbine supplier and operator
• Alstom Group (France) – a global leader in power generation and transport
• Taleveras Petroleum Trading BV (British West Indies) – a crude oil and refined petroleum trading company
• Rivers State Government – a strategic investor in the project
BPE Denies Knowledge of Mopped-Up Funds
Speaking on the stalled sale, Alex Okoh, Head of Public Communications at BPE, stated that he was not aware of the funds being moved to the TSA. However, he confirmed that the PHCN retirees’ verification exercise was halted due to a lack of funds.
“The verification exercise could not be continued because there was no money,” Okoh said, adding that a new date had not been set for the process to resume.
Federal Government Faces Legal Battle Over Ajaokuta Steel
Meanwhile, in a separate development, the Federal Government is set to face Global Infrastructure Nigeria Limited (GINL) at the International Court of Arbitration in London over the revocation of the Ajaokuta Steel Complex concession. The Ministry of Mines and Steel had handed over the multibillion-naira plant to GINL but later revoked the concession, citing a lack of significant progress.
The legal battle escalated as the government sought to reclaim control of the massive steel complex. Acting Director-General of the BPE, Dr. Vincent Akpotaire, along with two directors and an external lawyer, traveled to London for the arbitration hearing scheduled for Monday, March 14, 2016.
Implications for Nigeria’s Power and Industrial Sectors
The continued delay in Afam Power’s privatization and the Ajaokuta Steel legal dispute highlight the challenges facing Nigeria’s economic reforms. With Taleveras stuck in bureaucratic bottlenecksand key privatization funds diverted to the TSA, investor confidence in the government’s privatization agenda could be further shaken.
As Nigeria seeks to revamp its power sector and industrial base, stakeholders will be watching closely to see if the government can resolve these lingering issues and fulfill its commitments to both local and foreign investors.
