Connect with us

Business

Power privatisation: Has FG fulfilled its promise?

Published

on

Power privatisation: Has FG fulfilled its promise?

Nigeria’s power privatisation exercise would clock five years in November, but progress in the sector has been stagnant, as the government has not done what it promised. Adeola Yusuf reports

 

 

Afew months into the fifth anniversary of power sector’s privatisation, the news about bickering between the Federal Government and investors outshined information, if any, about achievements of the scheme that came with much promises for Nigerians.

Friday, November 1, 2013, it was that the assets of the defunct Power Holding Company of Nigeria (PHCN) were handed over to investors who had coughed out over N4 billion. The dotted lines were signed, which among other things, promised to rescue millions of Nigerians from the jaws of epileptic power supply, decayed infrastructure, crazy billing and other vices that characterized the PHCN years.

 

The Minister of Power, Works and Housing, Mr. Babatunde Raji Fashola, personally signed a statement late July, which revealed his thoughts on the roles played by the DISCOs through Association of Nigerian Electricity Distributors (ANED) in the power privatisation exercise.

The ANED, on the other hand, organised world press conference to detail the role the minister played or did not play, that made the power sector to be at the state it is after five years of privatisation

 

Fashola’s tantrum

Fashola descended heavily on the management of (ANED), the umbrella body of Electricity Distribution Companies, DISCOs, describing it as interloper and “non-performers.”

The minister, who particularly took a swipe at the Executive Director of Research and Spokesperson of ANED, Mr. Sunday Oduntan, in a statement he personally signed in Abuja, challenged Oduntan’s ANED to pay, without further delay, the N800 billion it owes Nigerian Bulk Electricity Trading Company, (NBET).

 

He said: “Electricity consumers, which include Fashola, want better service; NBET wants its money; about N800 billion, so she can pay GENCOs.

“If DISCOs can prove that FGN owes more than what we admit, they should deduct, N72 billion, from N800 billion and pay the remaining N728 billion, which they owe NBET.”

Apparently reacting to recent statement attributed to ANED, Fashola said: “Before fiction becomes fact for lack of a response, I feel obliged to respond to SOME, NOT ALL of the allegations credited to one Mr. Sunday Oduntan who presents himself as Executive Director, Research and Advocacy of the Association of Electricity Distributors, (ANED), which he made in response to my directives to NERC (the regulator) and BPE/NBET as contracting parties to the DISCOs.

 

“Throughout my press statement, which contained the directives, I referred copiously to the provisions of the Electric Power Sector Reform Act, (EPSRA), which is the law that regulates the power sector. I referred to DISCOs in their capacities as licensees.

 

“Mr. Oduntan should tell members of the public if ANED is a licensee. He should tell the public whether he is an investor in a DISCOs and in which DISCOs he has invested and what he invested. He should tell members of the public that I walked him out of our monthly meeting because he has no capacity to attend and he was not invited. If ANED is not a licensee, who is ANED ? An NGO? If so, they should listen to consumers because nothing is going on about poor service.

 

“The BPE, NBET and NERC, to whom my directives were made, contracted individually with DISCOs not as an association. Any right thinking and well-meaning person knows that power supply has economic consequences and has political relevance.

 

“However, to suggest therefore that my directives were political, turns reality on its head; because for the past 20 months, in all my public briefings at monthly meetings with the DISCOs, these same issues of service delivery of meters, estimated billings, investment in distribution equipment by DISCOs have dominated my remarks.

 

“However, assuming this was not so, do the onset of elections preclude the quest for better service or continued governance? If Mr. Oduntan represents the DISCOs who, for reasons best known to them, choose not to act to save their investments, that is a matter of choice for them.

 

“I do not recognise him because the law that guides my functions does not recognise him. His statement that no directives from me will save the power sector from collapse, is consistent with the views of someone who has no skin in the game. It is perhaps a Freudian revelation of the mindset of those he represents, whoever they may be.

 

“It is a sickening parallel of the Biblical story of the woman who tried to steal a baby before the great King Solomon and asked them to divide the child.

 

“It is revealing of the mindset of a saboteur, not a builder and he would do very well to acquaint himself and advise his co-travellers about the consequences of sabotaging the economy under our laws.”

 

DISCOs’s response

The DISCOs, however, declared that actions and inactions of the minister are responsible for their woes.

Oduntan, said this at a world press conference in Lagos.

 

He maintained that the minister’s relationship with stakeholders is headmaster/pupils rapport, in which no room is given for sincere collaboration.

 

The ANED spokesman said that interactive and collaborative talks that would aid development of the sector are not allowed at the monthly stakeholders meeting.

 

Besides, he said that the minister only comes around, read speeches and give orders to those he is expected to engage in “mind-to-mind talk” to get solutions to the challenges facing the sector.

 

“Under the watch of Mr. Fashola as the minister, the Nigerian Electricity Regulatory Commission (NERC) has conducted no minor review of the Multi-Year Tariff in violation of the law. This has worsened the under recovery in the entire value chain far above N1.1 trillion,” he said.

 

He also said the DISCOs are battling with dire economic situation foistered on them by the lack of cost reflective tariff.

 

Oduntan maintained that only one of the DISCOs had foreign direct investment as at the time the Power Holding Company of Nigeria (PHCN’s) assets were sold to them. Others he explained, procured the asset with facilities from the Nigerian banks.

 

“If DISCOs collapse many Nigerian banks will collapse with them,” he said.

 

“We have issued two force majueres – we told the government we can not meet contractual obligations.

 

“If I file for force majeuere and you can assure me that my money would be paid, we shall work on it. But Yola DISCOs has filed and up till now they have not being paid.”

 

If this continues, he said, “We (Nigeria) cannot have uninterrupted power supply in the next five years.”

 

On threat by the government to dip the shares of private investors in the DISCOs, the ANED scribe said: “I can assure you as a lawyer that because there is share sales agreement; because there is performance sharing contract, which stupilates performance expectations from shareholders, if and when we get to the bridge we shall cross it.

 

“Already, Gencos – generation companies, are in Court, DISCOs are also in Court and anything that can be done to address this issue will be done. It is with much regret that we feel compelled to respond to the significantly distorted picture that has been painted of the electricity distribution companies by the hounorable Minister of Power, Works and Housing, in his Press Briefing of Monday, July 9th, 2018”

 

Tales of woes

 

The investor of $82 million in the Jos Electricity Distribution Company (Jos DISCOs), Aura Energy Company (AURA), has placed its stake in the utility firm for sale for as low as $72 million, as the bankruptcy and poor Returns on Investment (RoI) rocking the sector degenerated.

The Federal Government, it would be recalled, handed over assets of the Power Holding Company of Nigeria (PHCN) to the investors on Friday, November 1, 2013.

 

About three months into the fifth anniversary of the historic handover, Chairman, AURA who doubles as Chief Executive Officer of Jos Electricity Distribution Company Plc, Mr. Tukur Modibbo, last Tuesday also declared plan by the investor to quit.

His company would be the second after Yola Electricity Distribution Company (Yola DISCOs) to quit.

 

He said this on the sideline of a news conference organised by the Association of Electricity Distributors (ANED) in Abuja.

 

Specifically, he said that DISCOs were not bankable, adding that this was liable for their inability to fully obtain the required funding to invest in their distribution networks.
The management of the company, he added, was ready to sell it off due to poor returns on investment.
He decried the rate of non-returns on investors’ funds in the distribution value chain of the power sector.
“The balance sheet of the DISCOs were not bankable, hence their inability to fully obtain the required funding to invest in their distribution networks,” he said.
According to him, Jos DISCOs is ready to give up its license if the Federal Government could refund the money invested in the utility.
“We bought Jos DISCOs for 82 million dollars, we are ready to give it away for 72 million dollars if we see buyers now, if government refund the investors their money we will quit the business.’’
He, however, called on the Minister of Power, Works and Housing, Mr. Fashola to meet with the investors to hear their challenges with a view to evolving possible solutions to the challenges in the sector.
He said: “I was part of the team; we had to rely on records given to us by BPE. I can tell you that the records were not accurate as there was no technical audit of a financial audit of the firms when they were under PHCN.”
The estimated Aggregate Technical, Collection and Commercial (ATC&C) losses, customer enumeration and metering requirement by BPE, Modibbo said, were wrong coupled with huge old legacy debts, which the DISCOs took from the N213 billion CBN loan. The investors are currently paying interest for the sum taken from the N213 billion CBN loan.
“We have invested much in the utility, but we have not made any gain,” he claimed after about five years of being in the saddle.
Corroborating Modibbo’s view, Chief Operating Officer, Ibadan DISCOs, John Ayodele, said that the DISCOs could not embark on physical due diligence of the privatised power entities before taking over the assets.
“There was no accurate technical or physical due diligence on what DISCOs bought.’’
Oduntan added: “DISCOs investors, who paid $1.4 billion (about N427bn) for the distribution assets have not made any return on their investment, a condition, which was the basis of the investment after a five-year performance period.”
He said that a N1.3 trillion market shortfall in the DISCOs’ financial books hinders their performance on improved metering, customer service and increased customer connections.
The DISCOs’ operators also decried wrong investments by the Rural Electrification Agency (REA) in cities instead of unconnected rural areas through the $350million World Bank fund that could have addressed deficit in the electricity market.
“Additionally, N78 billionhas been put in the budget for “distribution” projects to be implemented by the Transmission Company of Nigeria (TCN). Categorically, until the tariff gap is addressed by government, we do not see a pathway to meeting both commitments,” they said.

Last line
Nigerians are not interested in the bickering between the minister and the DISCOs. The Federal Government should honour it’s obligation; the minister should also work with the DISCOs and stop the “master/servant relationship” with the DISCOs. The duo should work together to give succor to millions of Nigerians in terms of efficient and effective power distribution.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Trending

Take advantage of our impressive online traffic; advertise your brands and products on this site. Call

 

For Advert Placement and Enquiries, Call:

Mobile Phone:+234 803 304 2915

 

Online Editor: Michael Abimboye

Mobile Phone: 0813 699 6757

Email: mmakesense@gmail.com

 

Copyright © 2018 NewTelegraph Newspaper.

%d bloggers like this: