Power is arguably one of Africa’s high priority sectors, birthing several attempts by stakeholders to put an end to incessant blackouts in the black continent.
Nigeria has become one of the forerunners in trying to improve the situation. With privatization appearing to be the way out, the country commenced restructuring and the reform of electricity sector in year 2000 with a mandate to create and develop a competitive electricity market.
Though Nigeria’s president, Goodluck Jonathan, had stated that the problem of funding was impeding the growth in the power sector, industry analysts have posited that despite cash investment over the years, power outages had become a perennial occurrence.
The recent visit to Africa by the United States President, Barrack Obama – who earmarked $17 billion for “Power Africa Initiative”- signalled another attempt to tackle the electricity predicament of the continent.
The Obama proposal saw the inclusion of Lagos-based development financier, Africa Finance Corporation (AFC), to accelerate the reforms in the power sectors in 6 African countries namely Nigeria, Ethiopia, Ghana, Kenya, Liberia, and Tanzania.
Through the initiative, AFC would collaborate to support and finance development and implementation of infrastructure projects, expected to improve the power in the listed states.
Recently, 54 firms submitted bids to the Power Holding Company of Nigeria (PHCN) to acquire various electricity plants across the country, out of which 25 companies were shortlisted, through the governement’s privatization scheme.
After bidding comes payment
According to local newspaper, Vanguard, after the initial instalment of 25 percent, the PHCN had mandated successful bidders to fully pay the remaining 75 percent by September 21, resulting in aggressive moves by the investors to raise the funds to meet deadline.
One of the bided plants, Kainji Hydroelectric power plant which has a capacity of 1,338 megawatts, and currently generating about 25 percent of total electricity supplied to the country, was allocated to Mainstream Energy Solutions Limited Consortium (MESL) through the bid.
MESL has just secured and signed a $170 million loan facility from the investment partner, AFC, under the scheme of arrangement that has Guarantee Trust Bank (GTB) as the underwriter for the deal.
According to AFC, the move was aimed at consolidating MESL’s bid, under the current privatization programme, assisting the firm to pay off the last instalment.
The chairman of MESL, Col. Sani Bello (rtd) said “this financing represents an important milestone and we appreciate the support of AFC and GTB for providing the required financing to support the country’s vision to manage and restore the nation’s foremost hydro-power plants”.
Also commenting on the investment, the CEO of GTB Segun Agbaje said the investment “will contribute to reducing Nigeria’s chronic power deficit.”
AFC is an African-led international financial institution, established in 2007 whose mission is to improve African economies by proactively developing and financing infrastructure, industrial and financial assets.