The Federal government has offered to sell a major power station, the 500MW Omotosho power plant, to China Machinery Engineering Corporation (CMEC), the Chinese engineering firm that upgraded the plant. This was announced on Wednesday in a statement by the Bureau of Public Enterprises.
Nigeria is privatising the bulk of its power sector to help increase electricity output by 10 times by 2020, although President Goodluck Jonathan's plan laid out three years ago is running behind schedule.
State-owned CMEC completed the second phase of the Omotosho power plant in South-West Nigeria last month, taking total output from 375 megawatts (MW) to 500 MW. This represents more than 10 percent of the nation's total capacity.
The Federal government wants to sell the plant to CMEC for $217.5 million, although $104 million would be offset against debts the government owes CMEC and a further $30 million would be kept for further work to be done by the Chinese firm, the BPE said in the statement.
China has made a number of loans in recent years to Nigeria to fund projects including a railway, aviation works, roads and power plants such as Omotosho, cementing its relationship with the energy-rich African country and also subsidising its construction industry.
Nigeria is now offering to sell the plant partly to pay back the loan. Industry experts also say power assets will be better managed and produce more electricity in company hands.
The government is breaking up the dysfunctional state electricity provider into 15 firms handling generation or distribution in different parts of the country.
All of the preferred bidders for the firms that Nigeria is privatising met a deadline last week to pay a quarter of their bids, a landmark step in the process.
Although Nigeria holds the world's ninth largest gas reserves, its total power output is around 4,000 megawatts. South Africa, by comparison, produces about 10 times the power for a population equal to about a third of Nigeria's.