Nigeria Renationalising Power Assets in Guise of Restructuring, Discos Allege

The 11 electricity Distribution Companies (Discos) in Nigeria on Sunday accused the federal government of surreptitiously moving to renationalise their assets years after the facilities were privatised.

In a statement by their umbrella organisation, the Association of Nigerian Electricity Distributors (ANED), the power distributors expressed worry over the prevailing situation which it said was being perpetrated under the guise of restructuring.

THISDAY learnt that the comments by the Discos came against the backdrop of a recent action by the federal government regarding the takeover of Kano, Benin and Kaduna electricity distribution companies by Fidelity Bank Plc after the bank initiated action to take over the boards of the three Discos.

The government had also announced through the Bureau of Public Enterprises (BPE) that with the takeover of Ibadan Disco by the Asset Management Corporation of Nigeria (AMCON), the BPE had obtained approval from the Nigerian Electricity Regulatory Commission (NERC) to appoint an interim managing director for the power firm.

The government further stated in a notice that it was restructuring the management and board of the Port Harcourt Disco to forestall an alleged imminent insolvency of the utility. The notice was jointly signed by the Director-General, BPE, Alex Okoh and the Executive Chairman, NERC, Sanusi Garba.

It also happened after a similar action on the Abuja Electricity Distribution Company (AEDC) which was fully endorsed by the federal government through its agencies.
But the Discos in the statement, noted that they were deeply concerned about the so-called “restructuring” of the five Discos, as announced by the BPE on July 5th, 2022, in collaboration with NERC.

The power distributors said they viewed the purported restructuring as inconsistent with all the guidelines and processes necessary to comply with the framework of privatisation agreements and the rule of law.

“We believe that it is reasonable to conclude that the resultant outcome has been an expropriation or backdoor renationalisation of the Discos by the Federal Government of Nigeria (FGN),” the statement signed by the Executive Director, Research and Advocacy, Mr. Sunday Oduntan, stated.

Such renationalisation or expropriation, the Discos argued must be viewed through a historical context as necessary for a proper understanding of the performance challenges that the Discos have been faced with since privatisation.

The Discos noted that fundamentally, the basis of privatisation was flawed from the beginning, due to conditions that were not met by the federal government, while expecting the Discos to meet their own performance obligations.

“Not only were the investors short-changed because of insufcient and unreliable data provided by BPE to them during the privatisation process, but the government also committed to and failed to deliver on debt-free financial books; payment of Ministries, Department and Agencies (MDA) electricity debts and N100 billion subsidy,” they stressed.

According to the Discos, the implementation of a cost reflective electricity tarif, which it said remained an unfulfilled condition had led to accrued significant debt and liabilities on the Discos financial books, as they have continued to sell electricity below the cost price.

Furthermore, the Discos argued that the private management of the Transmission Company of Nigeria (TCN), currently a government-owned and operated entity and a major requirement for attracting the private investment that was critical to addressing the transmission bottleneck currently belittling the Nigerian Electricity Supply Industry (NESI) value chain has not been carried out.

“These commitments have remained largely unmet over the post-privatisation period and have belatedly been partially addressed – too late to rectify current performance challenges,” the electricity distributors stated.

According to the statement, while the Discos were not exonerated from responsibility for performance failures, it would be unrealistic to reach related conclusions without taking into consideration the factors that have been listed previously, as well as the federal government’s contributions to these challenges.

It maintained that there was an established process by which a change of a corporate entity’s board of directors and management occurs, explaining that as such, it was with much surprise that the Disco investors awoke to the July 5, 2022, renationalisation or expropriation of the five entities.

“More so, given that due process was not followed and that the FGN, as a 40 per cent minority shareholder, is represented by the director general of BPE on the board of each of the Discos and is party to all decisions concerning the operations of the Discos,” the statement said.

According to the Discos, what currently exists in the industry is a misalignment of risk, technical and commercial factors, with the Disco investors bearing the brunt of the misalignment.

“Unless there is a correction of this misalignment to establish a balance that provides a pathway to sustainable commercial operations, from gas production to retail electricity delivery, the power sector will never attain the level of efficiency that is necessary to provide Nigerians with the significantly improved power situation that is urgently required.

“Expropriation or renationalisation, by itself, of the Discos will not change the current bleak situation or outlook of the Nigerian Electricity Supply Industry (NESI),” the statement noted.

Emmanuel Addeh

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