SOME experts in the power sector have warned that the furore trailing the take-over of five electricity distribution companies (DisCos) by the federal government is unhealthy for power sector reforms.
A Federal government team led by the Bureau for Public Enterprise (BPE) and the Nigerian Electricity Regulatory Commission (NERC) had on July 5, 2022 initiated steps to restructure the boards of the five DisCo, allegedly to save them from insolvency.
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The affected companies are the Kano Electricity Distribution Company (KEDCO), Ibadan Electricity Distribution Company (IBEDC), Benin Electricity Distribution Company (BEDC), Kaduna Electric, and Port Harcourt Electricity Distribution Company (PHED).
The NERC and BPE said the new boards for the affected discos had been approved and the Bureau was collaborating with the Central Bank of Nigeria (CBN) and the Ministry of Power to ensure there would be no service disruptions during the transition.
But the take-over has not been without some resistance, with some of the DisCos saying there are legal limits to the restructuring mandate of the Federal government.
For instance, the receiver/manager’s nominee of Integrated Energy Distribution and Marketing Company maintained it was the legal and beneficial owner of 60 per cent (controlling and managing) shareholding interests in the IBEDC.
Similarly, the management of the BEDC Plc said there was no legal basis for the take-over of the company following the purported activation of the call on its collateralised shares by Fidelity Bank.
The IBEDC, through its receiver/manager’s nominee, urged the public to ignore the two Federal government agencies – NERC and BPE – on the purported take-over, control and management of the company
An energy lawyer and power sector governance expert, Chuks Nwani, told THE ICIR that the growing tension on a litigation possibility over the take-over would be sending wrong signals to investors.
“The take-over should not just be to recover the funds, but to have a structured plan to move the sector from Point A to point B. This is the time for the government to make tough policy choices so that investors are not dissuaded,” Nwani said.
Another power sector governance expert, who is the immediate past spokesperson for Abuja DisCo, Oyebode Fadipe, told THE ICIR that the restructuring exercise must be well handled to avoid negative signals to investors.
“The exposure of banks to the power sector is huge. There have been lots of debts, including those of governments’ ministries, agencies and departments (MDAs). You could see Ibadan and Benin DisCos already pointing to legal concerns. This must be well handled by the government.
“The government must lead by example here and ensure it breathes confidence into the sector through proper policy enforcement,” Fadipe said.
A professor of Law at the Baze University, Abuja, and former Chairman of NERC, Sam Amadi, told THE ICIR that the regulator must properly manage the legal concerns associated with the restructuring.
“If the action of the receiver – in this case AMCON – does not derive from legal entitlement, then the DisCos can challenge AMCON’s intrusion into the DisCos ownership. These are issues that can lead to legal tussle and further create uncertainty in the sector. I expect a greater role by the regulator on this matter,” Amadi said.
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.
very clear and good article easy to understand. Thank you