Some Affected Electricity DisCos Photo Collage: BusinessDay

Failed Power Deals: Nigeria affirms 4 worst-performing DisCos, names interim MDs, divests coys’ shareholding

*The Bureau of Public Enterprises declares the majority interests in the affected electricity Distribution Companies would be sold to competent private sector investors with the requisite technical and financial capacity to enhance power distribution and supply to homes, businesses and organisations in the country 

Isola Moses | ConsumerConnect

Following their consistent dismal performance with attendant damaging socio-economic consequences on individual homes, businesses and organisations over time, the Federal Government has resolved to sell the majority interest in three of the 11 Electricity Distribution Companies (DisCos) to competent investors.

ConsumerConnect reports the Government Friday, June 8, 2022, declared that Benin (BEDC), Kaduna (KEDC) and Kano (KEDCO) electricity Distribution Companies are the worst-performing DisCos in Nigeria.

The Federal Government through the Bureau of Public Enterprises (BPE) and Nigerian Electricity Regulatory Commission (NERC), in its restructuring notice, had resolved to sell the majority interests in the three DisCos to competent investors to enhance power distribution and supply to consumers.

Alex Okoh, Director-General of BPE, in a statement noted the resistance by some DisCos on the move by Fidelity Bank Plc and the government to take over and restructure the poor-performing electricity companies in the country.

Also, the Receiver/Manager’s nominee of Integrated Energy Distribution and Marketing Company had argued last Wednesday that it was the legal and beneficial owner of 60 percent (controlling and managing) shareholding interests in the Ibadan Electricity Distribution Company.

Likewise, the Management of Benin Electricity Distribution Company Plc contended Wednesday that there was no legal basis for the takeover of the company, sequel to the purported activation of the call on its collateralised shares by Fidelity Bank, report said.

Both firms had stated these in response to the announcement of the Federal Government Tuesday regarding the takeover of Kano, Benin and Kaduna electricity distribution companies by Fidelity Bank after the bank had initiated action to take over the Boards of the three companies.

The Federal Government Tuesday through the BPE stated with the takeover of Ibadan DisCo by the Assets Management Corporation of Nigeria (AMCON), the BPE had obtained approval from NERC to appoint an interim Managing Director for the distressed power firm.

The government further stated in the restructuring notice, that it was reorganising the Management team and Board of Port Harcourt DisCo to forestall the imminent insolvency of the power utility.

Okoh and Mr. Sanusi Garba, Executive Chairman of NERC, signed the notice.

Despite the resistance by some affected power firms, a development that made the BPE declare Friday, that it would go-ahead to sell the majority interests in Benin, Kaduna and Kano DisCos.

Okoh said: “It is envisaged that the majority interest in these DisCos would be sold to competent private sector investors with the requisite technical and financial capacity to re-capitalise and manage these entities efficiently.

Electricty infrastructure

“As an interim measure, NERC and BPE met on an emergency basis and activated the business continuity process and appointed interim Managing Directors in the affected DisCos.”

The BPE Chief also stated in regard to Kano DisCo, the interim Managing Director was named as Ahmad Dangana; Benin DisCo, Henry Ajagbawa; and Kaduna DisCo, Yusuf Yahaya.

Je further stated: “It must be reiterated that some of the publications from the core investors of these DisCos have been quite disingenuous.

“Beyond the financial issues I have just discussed, the DisCos affected happen to be the worst-performing ones.

“Ibadan is currently being managed by a so-called receiver manager as a sole administration.”

Okoh as well noted: “The receiver manager has absolutely no capacity to manage a utility, and has not been authorised by the regulator as a manager of a DisCo.

“Ibadan is the worst performing Disco as per the performance assessment review conducted in December 2021.”

The Director-General said: “Ibadan DisCo has actually retrogressed in terms of their critical performance parameters as contracted in the performance agreement signed with the Bureau.

“In fact, the DisCo under the management of the core investor, Integrated Energy Distribution and Marketing Limited, has performed worse than before it was privatised.”

According to him, the performance of Benin, Port Harcourt, Kano and Kaduna DisCos “have also been abysmal.

“It is necessary to state, categorically, that the poor performance of these DisCos represents a clear and present threat to the power sector as a whole.

No responsible government and shareholder would stand idly by and allow this situation to persist.”

Notwithstanding the challenges in the sector, Federal Government has remained fully committed to ensuring optimal performance in the power sector of the economy, and would not shy away from taking the necessary decisive action to achieve this.

Okoh explained that the regulatory considered it imperative to clear the air on the insinuations and statements emanating from some of the electricity distribution companies which were restructured following the collaterised shares of some of the DisCos.

Earlier, the Bureau had earlier informed the public, BPE which midwifed the sale of the power companies and NERC, being the industry regulator, were informed by Fidelity Bank Plc on July 5, 2022, that a call on the collateralised shares of the core investors of Kano, Benin and Kaduna Discos had been activated by the lenders, said he.

Okoh as well stated that the lenders’ consortium include AFREXIM Bank, Keystone Bank, Stanbic IBTC, as well as Fidelity Bank.

“It is important to note that the action is a contractual and commercial intervention and is between the core investors in these DisCos and the lenders.

“BPE’s involvement is to protect the 40 percent shareholding of the Federal Government in the Discos,” Okoh also stated.

The Director-General noted: “It was on this basis that new Boards reflecting this action were constituted as follows: Kano DisCo – Hasan Tukur, Chairman; Nelson Ahaneku, member; and Rabiu Suleiman, member.

“For Benin DisCo, KC Akuma is the Chairman; Adeola Ijose, member; and Charles Onwera, member; while Kaduna DisCo has Abbas Jega as Chairman; Ameenu Abubakar, member and Marlene Ngoyi, member.

“BPE has nominated Bashir Gwandu (Kano DisCo), Yomi Adeyemi (Benin DisCo), and Umar Abdullahi (Kaduna DisCo) as independent Directors to represent government’s 40 percent interest in the aforementioned DisCos, during this transition.”

The regulatory agency, representing the interest of the Federal Government in the DisCos, and BPE had already engaged with the Central Bank of Nigeria (as the banking sector regulator) for an orderly transition, Okoh said.

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