* Three firms bid for management of power grid
* Investor retreat scheduled for October
* Parliament to consider regulatory body nominees next week
(Adds comment from financiers, details throughout)
By Nick Tattersall
LAGOS, Aug 27 Nigeria will hand over management
of its electricity grid to a Canadian, Indian or Irish firm by
year-end as it embarks on the multi-billion dollar privatisation
of its dilapidated power sector, a top official said on Friday.
Bart Nnaji, head of a presidential taskforce charged with
reforming Nigeria's power sector, said Manitoba Hydro, owned by
the Canadian province of Manitoba, India's Power Grid Corp
(PGRD.BO) and Ireland's Electricity Supply Board (ESB) were the
three final bidders to manage the transmission network.
"I can tell you that we expect to finalise everything and
hand over by the end of the year," Nnaji told Reuters on the
sidelines of a conference in the commercial hub of Lagos.
President Goodluck Jonathan on Thursday unveiled a blueprint
for ending chronic power shortages in Africa's most populous
nation, which estimates its electricity sector needs $10 billion
of annual investment over the next decade. [ID:nLDE67P0P0]
Under the strategy, Nigeria will privatise power generation
and distribution. Government will continue to own the national
grid but its management will be privatised. [ID:nLDE67P1N9]
Nnaji said Nigeria would hold a "retreat" for investors from
around the world in mid-October to further explain its plans.
Despite being Africa's biggest oil and gas producer, Nigeria
relies on diesel generators to power everything from phone
chargers to luxury hotels because of constant power outages.
Jonathan's plan, unveiled less than five months before
elections are due to be held, is the most comprehensive yet
designed to solve the nation's power problems.
But previous privatisation efforts, most recently of former
state telecoms monopoly NITEL, have been a failure and investors
say the roadmap for reform will need to be backed up by
cast-iron guarantees on the regulatory framework.
Jonathan said he would send a list of members for a new
regulatory committee to the House of Representatives on Monday
and pledged its chairman would be highly credible.
"The whole sector is going to be dependent largely on the
strength of the regulator and the ability of the regulator to
enforce the rules of the game," Solomon Asamoah, deputy head of
the African Finance Corporation (AFC) which funds infrastructure
projects around the continent, told the conference.
Nigeria's generation has at times plunged below 1,000
megawatts (MW), around a tenth of its basic needs, largely due
to a lack of maintenance at power stations. South Africa, with a
third of Nigeria's population, has ten times the capacity.
The power problem is a major brake on development in
sub-Saharan Africa's biggest economy. The cost of power is
estimated to be nine times higher than in China and four times
higher than in Europe, leaving its industry unable to compete.
A big stumbling block in privatising the power sector in a
country most of whose 140 million people survive on less than $2
a day is setting a pricing regime which keeps power affordable
for the poor while allowing private firms to recoup investment.
Jonathan's blueprint foresees a "lifeline tariff" for the
poorest and a rate which varies with consumption and can be
pre-paid, making it more affordable for the lowest-volume users.
But financiers point out the amount of money Nigerians spend
each year on private generators means a sizeable portion of the
population would be ready to pay for reliable power.
The central bank says 60 million people rely on generators
and spend $13 billion a year fuelling them. Nigeria accounts for
40 percent of the small generator sets imported into Africa.
"The market is so enticing ... The base is low, which means
the growth potential is so high," AFC's Asamoah said.
"There is bountiful supply of fuel, of gas, and there is a
population that is able and willing to pay -- the proof is that
we pay so much more for self-generation. These are the
ingredients that private sector investors die for."
Osaze Osifo, head of investment banking and asset management
at Nigeria's First Bank FIRSTBA.LG, said the power blueprint
opened up project finance opportunities as well as the prospect
of equity and debt financing for the acquisition and
refurbishment of existing generation and distribution assets.
Long-term projects have often run into trouble in Nigeria
because they are financed with short-term debt. A 300 billion
naira ($2.3 bln) central bank fund and pledges of long-term
financing support from development agencies including the World
Bank and AFC aim to prevent such problems in the power sector.
(For more Reuters Africa coverage and to have your say on the
top issues, visit: af.reuters.com/ )
(Editing by Sue Thomas)