After nine years of lengthy legal tussle, Geometric Power has paid $26 million acquisition value for the Aba ring-fenced area Interstate Electric, the sponsors of Enugu Electric Distribution Company.
The asset was handed over on Wednesday by the National Council on Privatisation (NCP) through the Bureau for Public Enterprises (BPE) at a brief event in Abuja.
With the development, there would be a more efficient electricity supply to Aba city and its environment.
Barth Nnaji, chairman/founder, Geometric Power Limited, said the Aba ring-fenced project would really bring a new model of how to deliver electricity in the country.
“We are very delighted that today has come that we have gotten Aba ring-fenced and we are ready to give reliable electricity to the people of Aba,” an elated Nnaji, who is also Nigeria’s former minister of power, told BusinessDay after the handover.
Explaining the long tussle, Nnaji said, “ The issue was just simple: the former government sold what was rightfully ours to the people who acquired EEDC.
“So, they simply bundled the Aba ringed-fence as part of EEDC and gave it to them. But when they were doing it, they did it knowingly.
“And that is why we went to court and that is why all the processes, and we are very grateful that this government has mediated and resolved the issue.”
Nnaji said his company is also quite grateful that those involved in the acquisition, EEDC, along with Afrinvest saw reason to resolve the matter; “we have settled, and we have paid; we have now paid the acquisition price, which is $26 million.”
The $500 million power plant has the capacity to produce and distribute about 141 megawatts (MW) of electricity in its first phase, with new distribution lines, four new sub-stations and three rehabilitated sub-stations.
Afreximbank, the key lender, will bring on close to $50 million of which $26 million has been used to reacquire the asset, while the balance is to basically complete infrastructure and ensure it can deliver the much-needed power the area requires in boosting industrialisation and export capacity.
Speaking on the new strategic plans for the Aba asset, Nnaji maintained that first of all, anybody acquiring a power distribution company (Disco) should have the financial and technical capacity, and that is what we did in Aba, Buinessday reports.
“We have actually made the necessary investments to ensure there are no issues in terms of reliability for electricity supply. We have embedded generation and distribution, which ensures a reliable supply of electricity.
“We have invested about eight times the amount of the acquisition in Aba already. We built new substations, new power lines, in fact over 140km of new lines. We built four brand new substations. When we came in, there were only three substations – 2 by 15MPH each, so we built exactly the same size of four brand new ones.
“And we’ve built gas pipelines – 27km – to ensure that we have our gas uninterrupted from Shell to us, etc,” he said.
The huge investment so far is to ensure that the network works effectively and to position the Aba ring-fenced area to set the pace in electricity generation and distribution, he stated.
“In addition to the power plants, we have built an embedded Power Plant 141 megawatts, which if you look at the amount of power that goes into Enugu Disco, is about half of the total power going into it right now, he said.
“So, that is how much power we have built just for Aba alone. That is what it takes to have reliable electricity. So, that is the plan,” he said.
To avoid estimated billing, he disclosed plans to invest heavily in pre-paid metering, saying, “This is to ensure that all the consumers in Aba are metered in the next two to three years.”
Alex Okoh, director-general, BPE, said the handover represented another notable success in the government’s sectoral and enterprise reform programme.
Explaining the resolution process, Okoh said the bureau initiated a series of engagements with various stakeholders, which led to one, the signing of the term sheet between Geometric Power and Interstate Electric Limited, the core investor in EEDC.
Another initiative taken by the BPE was to sign an agreement between the Federal Government, Geometric Power, and Interstate Electric on the principles that will guide the resolution of the licensing overlap between EEDC and Geometric Power as well as the sale and transfer of the asset by the EEDC to Geometric Power, he said.
“Following the approval of the transaction by the NCP, BPE on behalf of the Federal Government, Interstate Electric Limited executed an asset transfer agreement through which both parties transferred their respective interest in the Aba ring-fence area to Geometric Power.
“Although the transaction will generate some revenue for the government and Interstate Electric, the most important gain is “that the Federal Government was handing over this asset to a very tenacious investor who has made a firm commitment to transform the Aba ring-fence area into a model electric supply franchise, providing quality, stable and appropriately priced electricity to consumers, thereby unlocking the significant economic benefits of this commercial and industrial hub of the regional and national economy,” he said.
While Okoh acknowledged a number of challenges facing the electricity sector, he assured of the government’s commitment to resolve the issues and create an enabling environment that will attract and incentivise private sector capital into the sector.
Read also: Geometric to power Aba as BPE hands over today
Kester Enwereonu, director, EEDC, who represented Interstate Power, acknowledged that the handover marked the end to the ownership tussle of the Aba ring-fenced, which he said actually began right from the time the acquisition process was concluded.
For Peter Olowononi, head of client relations for West Africa, Afreximbank, the handover was symbolic, in terms of helping the bank achieve a key objective of catalysing industrialisation, not only in Nigeria, but on the continent of Africa.
“As we all know, the Geometric ring-fenced area signifies real potential for the Aba, which has shown very strong characteristics of industrialisation in terms of the manufacturing capacity of Eastern Nigeria, as Afreximbank, industrialisation and export manufacturing are one of our cardinal strategic pillars.
“And so by coming into this transaction and helping Geometric to reacquire the Aba ring-fenced area is very symbolic in helping them put the power infrastructure which they have built to use, and ensuring that these manufacturing capacities can be brought to life as soon as possible,” Olowononi said.
