* Most power assets have so far gone to local oligarchs
* Power task force head says foreign interest growing
* Nigeria selling sector to try to end crippling blackouts
By Tim Cocks
LAGOS, Oct 2 The initial sell-off of state power
assets, designed to end decades of electricity shortages, mostly
attracted local oligarchs, while foreign firms with the
technical know-how shied away from the risks of doing business
But that may be changing, the chairman of the presidential
task force on power Bekindo Dagogo-Jack told Reuters on Tuesday.
Speaking on the sidelines of a power conference in Lagos,
Jack predicted a "second wave" of privatisation as the local
tycoons sell assets to foreign players, after showing that this
messy sector with massive pent-up demand can be profitable.
A second round of bidding, this time for brand new power
plants, had seen a lot more interest from outside than the round
concluded this week for old assets, which went to local buyers.
"There's been ... interest in buying these assets from
businesses across the world," he said, adding that a group of
U.S. investors had lobbied through diplomatic channels to try to
extend the deadline for submissions.
He declined to give specific details of bidders, but
indicated foreigners were warming to the sector.
A successful privatisation process that improves supply
would leave President Goodluck Jonathan with a lasting legacy,
and help answer critics who complain about the slow pace of
reforms and question his record on graft and security.
It may also be the best chance yet to unlock the potential
of Africa's most populous nation and second biggest economy.
Jonathan handed ownership of the bulk of the moribund state
electricity company to private buyers on Monday.
Most bid winners were oligarchs connected to the political
elite, like former military president Abdulsalami Abubakar,
former military governor of Kano state Sani Bello and tycoons
Emeka Offor and Tony Elumelu, but with some recognised technical
partners like Siemens and Manila Electric.
Dagogo-Jack said this was to be expected.
"Lending agencies were asking for a lot before they put
their money down. That makes it difficult for technically
competent investors to show," he said.
"The so-called local oligarchs were born here, they grew up
here. What others call risk, they call opportunity."
That would change if the oligarchs can turn things around.
"There could be a second wave privatisation when people will
now know that their fears did not materialise ... between the
so-called oligarchs and ... (foreign investors)," he said.
In the next phase, the government is seeking investors for
80 percent stakes in 10 new gas power plants. The price tag of
$500 million initial investment per plant is five times that for
older state assets, industry sources said.
Potential buyers have also raised concerns about the
reliability of gas supply and the transmission network.
Dagogo-Jack said plans to deregulate the gas price -- so
producers get the same as on the international markets -- would
solve that problem, unlocking the world's ninth largest gas
reserves. "You can't get a better incentive than that," he said.
He added that the transmission network would eventually be
privatised too, but only when the market is more mature.
Despite being the continent's top oil producer, Nigeria's
power output is a tenth of South Africa's for a population
triple the size, putting a major brake on economic growth.
He said power supplies -- which have dwindled in the past
year because of gas supply problems -- would improve in the next
"It will take time, but they have their eyes on profit and
the only way to improve profit is to produce more electricity."
(Editing by David Cowell)