* Nigeria selling state power firm for $2.5 billion
* Electricity shortages are huge brake on economy
* More state power plants to be sold next year
By Joe Brock
ABUJA, Sept 30 (Reuters) - Nigerian President GoodluckJonathan handed ownership of the bulk of the state electricitycompany to private buyers on Monday, completing one of the finalstages of a privatisation process meant to end decades ofdebilitating power shortages.
Despite holding the world's ninth larg est gas reserves,Nigeria only produces a tenth of the amount of electricity asSouth Africa for a population three times the size.
The Power Holding Company of Nigeria (PHCN) keeps the lightson for only a few hours a day, forcing those who can afford itto rely on expensive diesel generators that burn up billions ofdollars from the Africa's second largest economy.
Despite slow and costly progress, Jonathan's effort toprivatise the sector and draw in investment may be the bestchance yet to unblock a major bottleneck to development.Improvements could be felt in 2-3 years, experts say.
"I congratulate our new owners who have taken over theengines and cables that are expected to drive not just theelectricity industry but also the socio-economic well-being ofthe nation," Jonathan said, after handing private buyerscertificates of ownership at a glitzy ceremony in his villa.
It was eight years after a law passed to enable the process.
"To the Nigerian people, who have demonstrated such greatpatience and confidence, putting up often with darkness... I saybetter days are coming," Jonathan added.
Most bid winners were oligarchs connected to the politicalelite, like former military president Abdulsalami Abubakar,former military governor of Kano state Sani Bello and tycoonEmeka Offor, but with some recognised technical partners likeSiemens and Manila Electric.
Fixing electricity could reduce business costs by up to 40percent, add 3 percent to GDP and cut the mass unemployment thatfuels unrest seen in oil theft in the south and a bloodyIslamist insurgency in the north, economists say.
Some $40 billion has gone into several power reform drivesin the last 20 years, much of it wasted.
The PHCN was split into six generation and 11 distributionfirms, all sold separately, for about $2.5 billion in total.
BRIGHTER TIMES AHEAD?
Private buyers for five generation companies and 10distribution firms collected their share certificates andoperating licenses from Jonathan during the ceremony.
The buyers will take physical ownership of theinfrastructure next month, government officials said.
Two remaining companies are expected to be sold within sixmonths.
Nigeria is also planning to sell off 10 more newly builtstate power plants, all gas-fired, by next year.
That only six of these plants have been completed sincePresident Olusegun Obasanjo first unveiled plans for them in2004 shows how slowly electricity reforms are moving.
If competent buyers get the NIPP plants it could be a boostfor foreign energy operators with latent gas reserves like RoyalDutch Shell and Chevron.
A lack of investment in the transmission network, whichremains in public hands, poor gas supply and labour disputesstill threaten to delay progress in boosting power output.
Nigeria's government has agreed to pay off more than 14,000workers at PHCN with a total of 384 billion naira ($2.4billion), about what it got from the privatisation.
Jonathan said on Monday $750 million had been raised to helpimprove transmission, some funds coming from a Eurobond.
As well as selling off existing assets, more are planned.Nigeria signed a deal last week for Chinese state companies tobuild a $1.3 billion power plant.
- Politics & Government