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Five Firms Bid for Afam, Yola Power Companies

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Power - Investors King
  • Five Firms Bid for Afam, Yola Power Companies

Five firms have submitted financial and technical bids to purchase 51 per cent stake in the Afam Power Plc – an electricity generation company – and Yola Electricity Distribution Company.

Head, Public Communications at the Bureau of Public Enterprises, Amina Othman, disclosed this in a statement made available to our correspondent in Abuja on Monday.

Othman said that the five companies beat the Friday deadline set for the submission of financial and technical proposals.

She said, “A total of five bids were received by the BPE on Friday, March 15, 2019 – being the deadline for the submission of technical and financial proposals for the acquisition of the Yola Electricity Distribution Company and Afam Electricity Generation Company (Afam Power Plc & Afam Three Fast Power Limited) by prospective core-investors.

“Two firms – Quest Electricity Nigeria Limited and Sandstream Nigeria – submitted proposals to acquire the Yola Disco while DiamondStripes Consortium, Unicorn Power Generation Consortium and Transcorp Power, sought to acquire the Afam Genco.

“Sandstream submission was, however, found to be non-responsive as it failed to include a bank guarantee in line with the requirements in the Requests for Proposal.

Accordingly, the representative of the firm took the bid back.”

Speaking on the development, the Director-General of BPE, Mr Alex Okoh, assured the bidders that the evaluation of their bids would be subjected to the highest level of integrity culminating into the financial bids opening of the successful bidders.

Okoh said the Evaluation Committee would meet immediately to discuss and finalise the scoring criteria before commencing the evaluation process which was expected to end on Thursday.

A total of 19 firms had indicated interest to acquire the Afam Power Company and the Yola Distribution Company put up for sale by the Federal Government at the close of the submission of bids for the Expression of Interest at 1 pm on Tuesday, September 26, 2018.

The request for expression of interest in the two companies was published by the BPE in national newspapers on August 16, 2018, and after evaluation of the EOIs, 11 firms qualified for the next stage but only the five were successful.

The Yola Distribution Company had been successfully privatised and handed over to the core investor in 2013. However, a force majeure was declared in 2015 by the core investor citing insecurity in the North-East region of the country. Following this, the company was duly repossessed by the Federal Government.

The transaction for Afam Power Generation Company, on the other hand, fell through due to the delay in signing the Gas Supply Agreement and the Gas Transportation Agreement.

In 2017, the National Council on Privatisation gave approval for a fresh transaction to privatise the two power companies, Othman said.

It is expected that the successful bidders will be responsible for operating the generation and distribution companies, making the necessary investments to improve the generation and distribution networks and customer service in line with the objectives of the Federal Government of Nigeria set out in the National Electric Power Policy, the BPE spokesperson added.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Economy

Nigeria Allotted $3.35bn From IMF’s Special Drawing Rights(SDRs)

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IMF

Nigeria has secured about $3.35 billion as part of a historic general allocation of Special Drawing Rights (SDRs) of the International Monetary Fund (IMF).

This is part of the general allocation of about SDR456 billion – an equivalent of $650 billion – by the IMF Board of Governors.

This will help to boost liquidity in Nigeria that is currently battling declining revenue.

The allocation which was approved on Monday aims to boost global liquidity at a time when the world is grappling with the coronavirus (COVID-19) pandemic.

“This is a historic decision – the largest SDR allocation in the history of the IMF and a shot in the arm for the global economy at a time of unprecedented crisis,” said IMF Managing Director, Kristalina Georgieva.

Although it is not a currency, the SDR is an international reserve asset created by the IMF to supplement the official reserves of its member countries.

It is a potential claim on the freely usable currencies of IMF members and can provide a country with liquidity. The SDR is defined by the US dollar, Euro, Chinese Yuan, Japanese Yen, and the British Pound.

The amount allocated to Nigeria is as a result of the exchange rate of reference which is 0.702283 SDR to a dollar as of July 1, 2021, and Nigeria has 2.4545 billion SDRs.

“The SDR allocation will benefit all members, address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy,” the IMF managing director added.

“It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis.”

According to the IMF, the general allocation of SDRs will become effective on August 23 and the newly created SDRs will be credited to IMF member countries in proportion to their existing quotas in the Fund.

It stated that about $275 billion (about SDR 193 billion) of the new allocation will go to emerging markets and developing countries, including low-income countries.

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UN Chief Welcomes Historic’ IMF Liquidity Boost for Governments in Need

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As the COVID-19 crisis continues to exacerbate restrictions on government spending throughout the world, the UN chief on Tuesday welcomed the decision by the International Monetary Fund (IMF) to approve a $650 billion allocation of Special Drawing Rights to “boost liquidity”.

Secretary-General António Guterres issued a statement on the policy change towards Special Drawing Rights or SDRs, a type of foreign reserve asset that is IMF defined and maintained, as additional funding that could help to pay down debts.

He also underscored that economies not in need of access to cash should “consider channeling these resources to vulnerable low and middle-income countries that need a liquidity injection by replenishing the IMF’s Poverty Reduction and Growth Trust Fund”.

‘Historic decision’

Yesterday’s IMF’s allocation makes new borrowing available to the fund’s 190 member countries, roughly in proportion to their share of the global economy.

“This is a historic decision – the largest SDR allocation in the history of the IMF and a shot in the arm for the global economy at a time of unprecedented crisis”, said IMF Managing Director Kristalina Georgieva.

“The SDR allocation will benefit all members, address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy. It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis.”

Halting debt default

The Secretary-General stressed that it is also “critical to quickly establish the proposed Resilience and Sustainability Trust at the IMF…[for] a comprehensive response and recovery, including providing more support for vaccinations and debt management and to support the efforts of developing economies in restructuring for inclusive growth”.

Last month, he urged the world’s largest economies to spearhead a global COVID-19 vaccination plan and expand debt relief to developing countries battered by the pandemic.

Bulwark against default

He also advised supporting a new $50 billion IMF investment roadmap aimed at ending the pandemic and driving a fast recovery.

As many developing countries are “teetering on the verge of debt default”, the UN chief encouraged the G20 leading industrialized nations to channel unused SDRs to the Fund’s new resilience and sustainability plan, for these nations.

“Special Drawing Rights also need to be considered as additional funding, not deducted from Official Development Assistance”, he reminded.

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Economy

IMF Approves Largest SDR Allocation In History to Boost Global Liquidity

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The Board of Governors of the International Monetary Fund (IMF) has approved a general allocation of Special Drawing Rights (SDRs) equivalent to US$650 billion (about SDR 456 billion) on August 2, 2021, to boost global liquidity.

“This is a historic decision – the largest SDR allocation in the history of the IMF and a shot in the arm for the global economy at a time of unprecedented crisis. The SDR allocation will benefit all members, address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy. It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis,” IMF Managing Director Kristalina Georgieva said.

The general allocation of SDRs will become effective on August 23, 2021. The newly created SDRs will be credited to IMF member countries in proportion to their existing quotas in the Fund.

According to the IMF, about US$275 billion (about SDR 193 billion) of the new allocation will go to emerging markets and developing countries, including low-income countries.

“We will also continue to engage actively with our membership to identify viable options for voluntary channeling of SDRs from wealthier to poorer and more vulnerable member countries to support their pandemic recovery and achieve resilient and sustainable growth”, Ms. Georgieva said.

One key option is for members that have strong external positions to voluntarily channel part of their SDRs to scale up lending for low-income countries through the IMF’s Poverty Reduction and Growth Trust (PRGT). Concessional support through the PRGT is currently interest-free.

The IMF is also exploring other options to help poorer and more vulnerable countries in their recovery efforts. A new Resilience and Sustainability Trust could be considered to facilitate more resilient and sustainable growth in the medium term.

In April last year, Nigeria collected $3.4 billion—equivalent to 100 percent of its quota— under the IMF’s Rapid Financing Instrument, RFI, to tackle the funding gaps created by COVID-19, especially when the crude oil market stagnated.

The financial support, approved by the IMF Executive Board on April 28, 2020, provided critical support to shore up Nigeria’s healthcare sector and shielded jobs and businesses from the shock of the COVID-19 crisis while helping to limit the decline in the nation’s external reserves.

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