CESC makes Nigerian foray
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Sanjiv Goenka-controlled power utility CESC has made an entry into the Nigerian power sector through a consortium that has picked up stake in a Nigerian power distribution company, Port Harcourt, via the bidding route.
The Nigerian government is privatising its distribution business by offering 60% stake in 11 distribution companies. The consortium, of which CESC is a part, had bid for two distribution companies ó Port Harcourt & Ikeja ó but emerged successful for Port Harcourt only.
CESC vice-chairman Sanjiv Goenka said other partners in the consortium are a Nigerian firm and three private equity firms. CESC is a technical partner and has not provided any equity so far in the process of participating and winning the bid.
"CESC has no obligation, but it has an option of picking up up to 6% stake in the company, which will be exercised later if the business proves viable," said Goenka.
He said CESC's role will be of a technical service provider in network planning, supervision of implementation plan and improvement of efficiencies in distributing power. CESC will get a fee of $ 2.5 million per year for a five years contract period and the contract is renewable.
The contract has set a target of reducing transmission and distribution loss by 80%, which will result in an additional revenue generation for the Nigerian company. Each partner of the consortium in the company will get 12.5% of the additional revenue generated by the way of reducing T&D losses, Goenka said.
Harcourt covers a distribution area of 48,000 sq km and has an annual turnover of $ 180 million. CESC on Friday reported a profit after tax of R136 crore up 19% year- on- year, for the September quarter FY13.