THE Association of Nigerian Electricity Distributors (ANED) has expressed its displeasure with the Federal government over the recent takeover/restructuring of five of its members.
To ANED, the take-over/restructuring of the five distribution companies could, at worst, be described as “renationalisation.”
The Federal government had on July 5, 2022 announced the take-over/restructuring of the Kano Electricity Distribution Company (KNEDC), Kaduna Electricity Distribution Company (KEDC), and the Benin Electricity Distribution Company (BEDC).
The government also announced the take-over of the Ibadan Electricity Distribution Company (IBEDC) by the Assets Management Company of Nigeria (AMCON), with the Bureau of Public Enterprise (BPE) getting approval from the Nigerian Electricity Regulatory Commission (NERC) to appoint Kingsley Achife as the managing director of the DisCo.
Also restructured was the board and management of the Port Harcourt Electricity Distribution Company (PHEDC), ostensibly to forestall its imminent solvency.
ANED has pooh-poohed the restructuring exercise, alleging that the BPE had in the first place shortchanged the entire 11 distribution companies when the facilities were privatized in November 2013.
The association also accused the Federal government of non-payment of an agreed sum of N100 billion subsidy on the electricity sector since the privatization.
Some industry stakeholders have also expressed their reservations with the government’s action, noting that it exposed further weaknesses in the 2013 power privatisation exercise.
ANED, in a statement it issued on Sunday July 31, 2022, described the move as “a backdoor rationalization of the power firms” by the Federal government.
The statement, signed by the ANED Executive Director, Research and Advocacy, Sunday Oduntan, read, “Although some of the affected power firms had commenced legal actions against the move, the association viewed the restructuring to be inconsistent with all the guidelines 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.
“Such renationalisation or expropriation 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.
“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 performance obligations.
“Not only were the investors shortchanged because of insufficient and unreliable data that was provided by the BPE to them during the privatisation process, the government also committed to and failed to deliver on debt-free financial books; payment of ministries, department and agencies electricity debts; and N100bn subsidy.”
ANED listed other areas it considered as failure by the Federal government in its obligation to the sector as including inability to implement a cost-reflective electricity tariff overtime.
He stressed that poor enforcement of the cost-reflective tariff overtime had led to accrued significant debts and liabilities on the Discos’ financial books, as they continued to sell electricity below the cost price.
Another alleged government’s failure identified by ANED is the management style of the Transmission Company of Nigeria (TCN).
“The privatisation of TCN was a major requirement for attracting private investment critical in addressing the transmission bottleneck currently belittling the Nigerian Electricity Supply Industry value chain. It is yet to be done.
“These commitments have remained largely unmet over the post-privatisation period, and have belatedly been partially addressed – too late to rectify current performance challenges.
“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,” the statement noted.
Meanwhile, the Ministry of Power is yet to respond to ANED’s concerns. However, the Minister of Power, Abubakar Aliyu, had once told THE ICIR he was ready to make a submission for the privatisation and unbundling of the TCN to the National Council on Power for deliberations.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.