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KPIs: Nigerian Government to sell off DisCos under AMCON, banks over poor performance

Mr. Adebayo Adelabu, Honourable Minister for Power

*The Federal Government of unveils plans to sell off the five of the electricity Distribution Companies being managed by the Asset Management Company of Nigeria and some banks to technical power operators by July 2024 because of noticeable, continued poor performance

Isola Moses | ConsumerConnect

In a move to save the companies from insolvency, among other stated reasons, the Federal Government of Nigeria has broached plans to sell off the five of the electricity Distribution Companies (DisCos) managed by some banks and Asset Management Company (AMCON) to technical power operators, by July 2024.

ConsumerConnect reports Mr. Adebayo Adelabu, Honourable Minister for Power, disclosed this development Monday, April 22, during an oversight visit of the Senate Committee on Power to the ministry, in Abuja, FCT.

Nigerian Government in conjunction with Fidelity Bank and AMCON in a move to save the companies from insolvency, among other reasons, in 2022, took over the affairs of Kano Electricity Distribution Company (KEDCO), Ibadan Electricity Distribution Company (IBEDC), Benin Electricity Distribution Company (BEDC), Kaduna Electric, and Port Harcourt Electricity Distribution Company (PHED)

According to the Minister, the decision became necessary due to their continued poor performance, which he said was a setback to the Nigerian Electricity Supply Industry (NESI).

Adelabu stated that the Ministry would prevail on the Nigerian Nigerian Electricity Regulatory Commission (NERC) to revoke underperforming licences and also change the Management Board of the DisCos if it becomes the solution.

“Lastly, on distribution. Very soon you will see that tough decisions will be taken on the DisCos. They are the last lap of the sector. If they don’t perform, the entire sector is not performing.

“The entire ministry is not performing. We have put pressure on NERC, which is their regulator to make sure they raise the bar on regulation activities. If they have to withdraw licenses for non-performance, why not? If they have to change the board of management, why not? Said the Minister.

He also noted: “And all the DisCos that are still under AMCON and Banks, within the next three months, they must be sold to technical power operators with good reputations in utility management.

“We can no longer afford AMCON to run our DisCos. We can no longer afford the banks to run our DisCos. This is a technical industry and it must be run by technical experts.”

According to Adelabu, efforts are ongoing to bridge Nigeria’s metering gap in the next four to five years.

The Minister further stated that the Federal Government has mobilised a company named Messr Zigglass with $ 200 million to supply three million meters that were yet to be supplied to date.

Adelabu stated President Ahmed Tinubu had equally directed that the contract be revoked, adding that the funding is coming from a seed capital of N100billion and N75billion.

TCN blames incessant grid collapse on gas shortage, weak infrastructure, others

Adelabu blamed issues in the industry on uncompleted projects, urging the committee to approve funds for the completion of over 120 projects that litter across the country.

Speaking during the visit, Isah Jibrin, a member of the Power Committee, noted that some of the operators had stripped the assets of the DisCos they took over in 2013.

Jibrin insisted that the operators of any revoked DisCo must be compelled to fix the assets as they were before handover.

Enyinnaya Abaribe, Chairman of Senate Committee on Power, also assured that the Upper Legislative Chamber of the National Assembly (NASS) would ensure increased budgetary allocation to the sector, as this would help in resolving most challenges in the sector.

Abaribe said: “Our biggest concern is the need for improved funding, so I think that we have to take it back to the Senate. For example, in this year’s 2024, budget, the TCN got just N2 billion and the rest of their spending was supposed to be from the internally generated revenue.

“Now, what is their internally generated revenue? It comes from the part that is paid to them for transmitting power.

“So when the grid collapses then they don’t transmit, then they don’t get any money. So that means that their funding to is not steady.”

The Chairman of the Committee revealed the Senate has also resolved to investigate the recent hikes in electricity tariffs in the country.

He noted: “Senate authorised investigation hearing on tariff increment. So we are going to do an investigative hearing on the 29th of this month. We are going to be taking issues from those who are directly concerned about the tariff hike but that will be on the 29th.

“For today, what we came to do was to do a familiarisation visit and an oversight visit the the ministry and the TCN. Luckily they are in the sesame building so it’s easier for us.

“We have also looked at their project, which is the solar grid for this building which we also hear has also been done for the office of the secretary to the government and the head of service we will also come back for the commissioning so that we are sure of every plan that they have told us that they are going to do.”

In her presentation, Nafisat Ali, Executive Director of the Independent System Operator (ISO), at TCN noted that the country’s power sector is currently faced with various challenges, impacting service delivery and lading to incessant collapse of the national grid.

Ali submitted that Nigeria had recorded 105 cases of grid collapse from 2015 to April 2024, adding that the incessant grid collapse occurs with any weakness in the power sector value chain.

DisCos fail consumers with interruptions in power supply, says Ali

She noted that the DisCos were still rejecting load despite the power shortage in the country.

“The causes of grid collapse in Nigeria spread across all participants, from generation companies, transmission and distribution.

“From generation companies there is the inadequacy of gas supply, improper coordination of plants and gas pipelines, poor generation availability.”

She said, “customers can experience Interruptions to their electricity Supply for three reasons such as reliability issues – where there is insufficient generation to meet consumer demand at a place and point in time; system security events – due to problems with the security of the network and transmission/ distribution network failures.

“To achieve a relaible sysyem, the system must have an adequate amount of capacity (generation, demand response and newwork capacity) to meet Consumer need. There should be adequate investment in all types of capacity, as well as appropriate operational decisions, so that supply and demand are in balance at any point in time

“To achieve a reliable power system, it is necessary to include a buffer in the supply, demand balance, known as reserves. This allows the actual demand a supply to be kept in balance, even in the face of shocks to the system.”

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