* Nigeria selling state power firm for $2.5 billion
* Electricity shortages are huge brake on economy
* More state power plants to be sold next year
By Joe Brock
ABUJA, Sept 30 Nigerian President Goodluck
Jonathan handed ownership of the bulk of the state electricity
company to private buyers on Monday, completing one of the final
stages of a privatisation process meant to end decades of
debilitating power shortages.
Despite holding the world's ninth larg est gas reserves,
Nigeria only produces a tenth of the amount of electricity as
South Africa for a population three times the size.
The Power Holding Company of Nigeria (PHCN) keeps the lights
on for only a few hours a day, forcing those who can afford it
to rely on expensive diesel generators that burn up billions of
dollars from the Africa's second largest economy.
Despite slow and costly progress, Jonathan's effort to
privatise the sector and draw in investment may be the best
chance yet to unblock a major bottleneck to development.
Improvements could be felt in 2-3 years, experts say.
"I congratulate our new owners who have taken over the
engines and cables that are expected to drive not just the
electricity industry but also the socio-economic well-being of
the nation," Jonathan said, after handing private buyers
certificates of ownership at a glitzy ceremony in his villa.
It was eight years after a law passed to enable the process.
"To the Nigerian people, who have demonstrated such great
patience and confidence, putting up often with darkness... I say
better days are coming," Jonathan added.
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 tycoon
Emeka Offor, but with some recognised technical partners like
Siemens and Manila Electric.
Fixing electricity could reduce business costs by up to 40
percent, add 3 percent to GDP and cut the mass unemployment that
fuels unrest seen in oil theft in the south and a bloody
Islamist insurgency in the north, economists say.
Some $40 billion has gone into several power reform drives
in the last 20 years, much of it wasted.
The PHCN was split into six generation and 11 distribution
firms, all sold separately, for about $2.5 billion in total.
BRIGHTER TIMES AHEAD?
Private buyers for five generation companies and 10
distribution firms collected their share certificates and
operating licenses from Jonathan during the ceremony.
The buyers will take physical ownership of the
infrastructure next month, government officials said.
Two remaining companies are expected to be sold within six
Nigeria is also planning to sell off 10 more newly built
state power plants, all gas-fired, by next year.
That only six of these plants have been completed since
President Olusegun Obasanjo first unveiled plans for them in
2004 shows how slowly electricity reforms are moving.
If competent buyers get the NIPP plants it could be a boost
for foreign energy operators with latent gas reserves like Royal
Dutch Shell and Chevron.
A lack of investment in the transmission network, which
remains in public hands, poor gas supply and labour disputes
still threaten to delay progress in boosting power output.
Nigeria's government has agreed to pay off more than 14,000
workers at PHCN with a total of 384 billion naira ($2.4
billion), about what it got from the privatisation.
Jonathan said on Monday $750 million had been raised to help
improve transmission, some funds coming from a Eurobond.
As well as selling off existing assets, more are planned.
Nigeria signed a deal last week for Chinese state companies to
build a $1.3 billion power plant.