You are in Home » Power Distribution: Discos And The Government In A Bunker

Energy situation.

The plan to turn the power into a public-private partnership is ongoing as Fidelity Bank wants to take over three power distribution companies.

Also, the Federal Government has in its plans to restructure two power distribution companies.

This planned takeover by the bank and the restructuring by the FG have led to the dragging of power distribution between the Discos and the FG.

The takeover of the three Discos by Fidelity Bank is being backed by the Federal Government through the Bureau for Public Enterprise.

However, from our research, the Discos are in fresh legal battles to prevent the government and the bank to take over power distribution in the country.

As the Federal Government announced the planned takeover and restructuring of some power distribution companies…

…diverse concerns have been raised by industry experts.

The takeover and restructuring of power distribution

The Federal Government made an announcement last Tuesday that Fidelity Bank…

…would take over Kano, Benin, and Kaduna electricity distribution companies.

This announcement came in after the bank initiated action to take over the boards of the three Discos.

The Bureau of Public Enterprises (BPE) announced that it had received approval from the Nigerian Electricity Regulatory Commission (NERC)…

…to appoint an interim managing director for Ibadan Disco… as Asset Management Corporation of Nigeria takes over the Disco.

Also, in last Tuesday’s restructuring notice, the government stated that it was restructuring Port Harcourt Disco to forestall the imminent insolvency of the utility. The notice was signed by Director-General Alex Okoh; and Executive Chairman Sanusi Garba.

Responses from various energy distribution companies

In response to the announcement, the nominee of the Integrated Energy Distribution and Marketing Company (IEDMC) argued the following day that it was the legal and beneficial owner of 60 percent (controlling and managing) shareholding interests in the Ibadan Electricity Distribution Company.

The management of Benin Electricity Distribution Company Plc (BEDC) has argued that there is no legal basis for Fidelity Bank’s takeover of the company.

Verdict of Kunle Olubiyo

In a statement yesterday (Monday), a member of the National Technical Investigative Panel on Power System Collapses (June 2013), who is also the President, of Nigeria Consumer Protection Network, Kunle Olubiyo praised the government’s move.

He explained that the licensees ordinarily had 10-year tenure, as the mid-term review should have taken place five years into the post-privatisation exercise.

This was not done across board.

The open book review, service level agreement, mass metering, investment in network improvement and overhauled, governance structure, the so-called (Discos) failed in all benchmarked global best practices and Key performance indicators.

As against investments in the immediate, medium and long term, what we saw was rent-seeking, profiteering and lack of fiscal responsibility and the much-needed discipline.

Olubiyo pointed out that no sector could survive without sanctions for impunity and consequences for infractions.

He stated:

In the prevailing circumstances, we are on the same page with relevant stakeholders in the present efforts to clean up the mess and free our economy held by its jugular by the non-performing utilities.

Energy Situation: Shocking reveal from a power expert

Prof. Yemi Oke noted that in 2009, the Power Holding Company of Nigeria (PHCN), a defunct company that is no longer operating, generated about 3,800 megawatts of electricity.

Today, after all the noise about privatisation, the generation is 2,400MW,” he stated.

In 2009 NEPA (National Electricity Power Authority)/ PHCN had only one MD/CEO (managing director/chief executive officer) managing the sector.

Today and post-privatisation, there are over 25 MDs/CEOs helping themselves from the revenue accruing from a paltry generation of 2,400MW. And they are crying about illiquidity.

Where will they have the money to service this inefficiency? 25 MDs/CEOs and over 100 executive directors etc, depending on 2,400MW.

This is the problem: jobs for the ‘boys’!

We’re in a deep, serious crisis as far of energy sector is concerned (petroleum, gas and power)!”

Oke said that at least five Nigerian banks might collapse under the burden of power-sector acquisition financing/lending.

Three banks had already gone bankrupt, and one had revealed itself by this move.

80 percent of Discos were technically insolvent, hence problems in the power sector may continue to occur.

We will experience an average of five to six national grid/system collapses per annum.

The energy expert, however, took issue with the BPE’s handling of the power sector.

It suits their incompetence and ignorance of what they profess they know how to do best that Nigeria and Nigerians are worst-off in their post-power sector privatisation.

They should be happier that a lot more industries have closed or been shut-down due to their breach of national confidence reposed in them.

At least, no electricity to power industries.

BPE should recall that this is privatisation designed, midwifed and delivered by the BPE.

Let them sell the remaining NDPHC (Niger Delta Power Holding Company) assets for ‘political patronages’ as usual.

They lack moral basis to talk down on Discos and their owners.

Energy Situation: Speaking on the Privatisation matter

A public-private partnership (PPP) consultant, Joe Tsavsar while speaking on the matter said:

Government has not given the so called Discos the MW of electricity as provided in the agreement.

The Discos can’t give what they are not given.

Government has not given the Gencos (generation companies) gas to produce power as provided in the agreement.

Energy situation.