Nigeria woos bidders for state-run power company

Nigeria has began to solicit bids for the nation's decrepit power grid, an offer that could be worth billions for private investors and that many hope will end frequent blackouts and erratic service in Africa's most populous nation.

Nigeria invited private companies to an investors' forum Tuesday held in Lagos, the West African nation's commercial capital, in a move to privatize the state-run Power Holding Company of Nigeria.

This was the first of five forums on the possible sale, with others being held in Johannesburg, London and New York and Dubai, United Arab Emirates. Bidding closes Feb. 18.

"The government is not so much interested in making profit, but rather in the need to build up the network," said Eyo Ekpo, a commissioner in Nigeria's electricity regulation body.

In theory, Nigeria's state-run firm is in charge of power generation, transmission and distribution for some 150 million people. In reality, the company barely provides power at all. Unreliable electricity blights Nigerians and hampers the economy.

Former President Olusegun Obasanjo reportedly spent as much as $16 billion to revamp the power grid during his tenure from 1999 to 2007 - to no visible effect.

But he did push through legislation in 2005 that led to the reform of the power sector by splitting the state entity into 11 distribution companies, six generation companies and one transmission company.

The government's plan is to seek investors' bids for the distribution companies and generation companies, with the government retaining ownership of the transmission company. The transmission company will be run by a contractor.

Although a series of recent government initiatives have shown a strong intent to reform the power sector, protracted delays in another major privatization project could dissuade investors.

Last year, the government sought to privatize the Nigerian Telecommunications Ltd., which is meant to provide landline telephone service. However, the state company's telephones rarely work and Nigeria has an estimated 1.3 million landline telephones, compared to 62.9 million mobile phones.

The sale process was marred with irregularities after a consortium offered $2.5 billion. More than two months after the payment deadline passed, and about ten years since the first attempt to sell Nitel, the company still rests in government hands.

But analysts believe the power sale has drawn more attention, as it is an industry vital to Nigeria.