THE estimated N260 billion expected from the proposed sale of the National Integrated Power Projects (NIPPs) across the country cannot be adequate to support the 2023 budget, amid rising budget deficits, economists told The ICIR.
Already, the Federal government and states had finally reached an agreement on the sale of five integrated power projects (NIPPs).
The director-general of the Bureau of Public Enterprises (BPE), Alex Okoh, who confirmed this development on Thursday, December 22, 2022 during an interaction with the National Assembly, put the agency’s projection on the sale at over N260 billion projection.
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The federal government, through the BPE, had since last year planned to divest 100 per cent of its shareholding in five of the power plants being run by the Niger Delta Power Holding Company (NDPHC) in order to finance the budget deficit.
The plants are Geregu Generation Company Ltd, Kogi; Ihovbor Generation Company Ltd, Benin; Calabar Generation Company Ltd, Cross River; Omotosho Generation Company Ltd, Ondo; and Olorunsogo Generation Company Ltd, Ogun State.
“The expectation in the fiscal plan for the federal government’s 2023 budget as regards asset sales is N260 billion. And the key assets that we are looking at are the power assets – the five of the NIPP plants. Incidentally, we are reaching some understanding with the state governors for the sale of those five power plants.
“And that’s what has really dragged this transaction for the past three years – just getting a common stakeholder understanding on the critical need to realise value from those assets now, before they depreciate beyond value,” Okoh said.
An economist with a vast knowledge on monetary and fiscal policy, Kelvin Emmanuel, told The ICIR that the sale of the power plants would not have any appreciable impact, citing concerns of Nigeria’s rising budget deficits.
“The economy is seriously in coma and the deficits of the budget is putting pressure on the economy. This week, President Buhari has sent a supplementary budget to the National Assembly of more than N800 billion, that I can bet you is to be funded by ways and means” he said.
He remarked that the economy was yet to be free from high inflation, weak currency problems, fuel scarcity and rising unemployment, all of which he said would impact badly on the damaged economy.
An economist and former senior programme officer with the Centre for Social Justice, Fidelis Onyejegbu, told The ICIR that the sale of the asset may not offer the needed support that could spike the budget to the required progression.
Onyejegbu said, “The N260 billion is way too poor for our overall budget. However, the government needs to create wealth by exploring other revenue options in order to correct persistent budget deficit.
“For a country that is in need of revenue, have we exhausted options to make power assets workable? Most privatisation processes have been fraught with irregularities. If we are caught with the devil and deep blue what kind of options do we have? Do we get the best deal from this? Is it really the best economic portion?”
Okoh noted that out of the projected proceeds, the Federal government owns 47 per cent, which he said would be used to fund the 2023 federal budget, while the remaining 53 per cent goes to the states since the assets are jointly owned.
The BPE DG, commenting on some of the electricity distribution companies (Discos) that had been taken over due to loan default, hinted that the United Bank for Africa (UBA), which took over the Abuja Disco, was already in talks with a core investor for asset acquisition and transfer.
“I know that in some quarters, it may have been misrepresented that the government took over the Discos; nothing of such happened. In the case of Ibadan Disco, it was Asset Management Corporation of Nigeria, AMCON which bought the debts of the initial lending institutions, although the matter is still in court as Ibadan DisCo seeks further legal interpretation on the matter. For Benin Disco, it was Fidelity Bank; Kaduna Disco, Afrexim and Fidelity Bank; Kano Disco, Fidelity Bank; and Abuja Disco, UBA,” he said.
He explained that the acquisition, with the support of the Nigerian Electricity Regulatory Commission and the BPE, was as a result of the bad debt of the DisCos, and to address an impeding collapse of the sector.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.