The Bureau of Public Enterprises (BPE) considers it imperative to clear the air on the insinuations and statements emanating from some of the Electricity Distribution Companies (DISCOs) which were restructured following the collaterised shares of some of the DISCos.
As we had earlier informed the public through various publications in the print and electronic media, BPE which midwifed the sale of the power companies and the Nigerian Electricity Regulatory Commission (NERC) which is the regulator in the sector, were informed by Fidelity Bank Plc on Tuesday, 5th July, 2022, that a call on the collateralized shares of the Core Investors of Kano, Benin and Kaduna DISCOs had been activated by the lenders. 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% shareholding of the Federal Government in the DISCOs.
It was on this basis that new boards reflecting this action were constituted as follows:
- Kano DISCO: Hasan Tukur (Chairman), Nelson Ahaneku (Member), Engr. Rabiu Suleiman (Member)
- Benin DISCO: KC Akuma (Chairman), Adeola Ijose (Member), Charles Onwera (Member)
- Kaduna DISCO: Abbas Jega (Chairman), Ameenu Abubakar (Member), 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% interest in the aforementioned DISCOs, during this transition.
As the agency, representing the interest of the Federal Government in the DISCOs, BPE has already engaged with the Central Bank of Nigeria (as the banking sector regulator) for an orderly transition and to ensure that the lenders do not hold the the collateralized shares of the Core Investors in perpetuity given that they do not have the technical capacity, nor have they been duly authorised to operate an electricity distribution companies. The lenders have also assured BPE and NERC that they would participate fully in all the ongoing market initiatives aimed at improving the sector (e.g., National Mass Metering Program).
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-capitalize and manage these entities efficiently.
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 as follows:
- Kano DISCO – Ahmad Dangana
- Benin DISCO – Henry Ajagbawa
- Kaduna DISCO – Yusuf Usman Yahaya
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. 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. 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 (IEDM), has performed worse than before it was privatized.
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 and no responsible government and shareholder, would stand idly by and allow this situation to persist.
BPE wishes to assure Nigerians that notwithstanding the challenges in the sector, Government remains fully committed to ensuring optimal performance in the power sector and will not shy away from taking the necessary decisive action to achieve this.
Mr. Alex A. Okoh
July 8, 2022.