The new core investor in Yola Electricity Distribution Company(YEDC), Quest Electricity Nigeria Limited, has pledged to commit over N28billion towards the improvements of service performance on the electricity franchise, the Bureau of Public Enterprise (BPE) said on Monday.
The Director General of BPE, Alex Okoh said in addition to the N19billion paid to acquire the franchise, the company also gave its commitment to improve the quality of life of the inhabitants in the North East geopolitical zone through an aggressive investment drive.
Okoh who spoke at the signing of the Share Sale and Purchase Agreement (SSPA) for the privatisation of YEDC on Friday in Abuja said the investment drive would provide an economic tool for combating the insurgency in the region.
“In addition to paying the purchase fee of N19billion, the new investor has committed to a Performance Improvement Programme which will involve an investment of $68million (about N28billion) over a period of two years.
“This investment will be utilised for the purpose of carrying out an extensive upgrade of the company’s electricity distribution network, in order to bring the business to the level of financial viability.
“It is expected that this investment will deliver results within a period of five years,” the Director General said.
The privatization agency’s boss said the investment would result in a reduction in the aggregate technical, commercial and collection (ATC & C) losses by 51 percent, from the current level of 80 percent (the highest in the industry) to 29 percent.
He said the investment would also result in a 50 percent growth in customer base from 396,650 to 596,650, and a 31 percent increase in energy supplied, from 1,305 GWh to 1,714GWh (over 400 GWh increase).
As a result of the aggressive investment drive by the investor, Okoh said the expectarion would be that the increase in energy supply would stimulate economic growth and development in the North East region through the creation of new industries and opportunities; attracting investment, and boosting job creation.
Okoh said t9he rigorous process of the negotiation which took place in the wake of the COVID-19 pandemic and its crippling impact on economic activities as well the challenging operational environment in the North East region of the country was a testament to the commitment and doggedness of the parties to deliver on the transaction and the high collaborative spirit between the Federal Government and the Core Investor.
“It is a clear indication that there is still a significant level of interest on the part of investors in the Federal Government’s reform and privatisation programme, notwithstanding the challenges in the power sector and the reaction that has trailed the privatisation process.
“This continued interest shows that the Federal Government took the right decision in reforming the power sector,” the BPE DG said.
The Chairman of Quest Electricity Nigeria Limited, Adamu Mele, noted the insecurity in the company’s area of franchise, but assured that it would work round it to tranform distribution company within a short time through infrasctrucure upgrade.
Following the approval of the National Council on Privatisation (NCP) for the privatisation of the Yola Electricity Distribution Company (YEDC) and the conclusion of a competitive and transparent bidding process involving local and international investors, Quest Electricity Nigeria Limited emerged as the Preferred Bidder with a bid price of N19bilion.
Yola DISCO was one of the 11 distribution companies that emerged after the defunct Power Holding Company of Nigeria (PHCN), formerly National Electric Power Authority (NEPA) was unbundled on March 11, 2005, under the Electric Sector Power Reform Act 2005 (ESPR) into 18 successor companies, six power generation companies (GENCos), one Transmission Company of Nigeria(TCN) and 11 Distribution companies (DISCos).
Yola DISCO which had the franchise responsible for the distribution of energy to Adamawa, Taraba, Borno, and Yobe states was formally privatized on November 1, 2013.
Integrated Energy, which had Tunde Ayeni as front Osa Okunbor, and a former military head of state, Abudulsalami Abubakar, acquired the Yola and Ibadan DISCOs in 2013 under the privatisation programme.
A year later, the company was forced to declare force majeure, resulting in the return of Yola DISCO to the federal government, blaming the insecurity in the North-East region as a result of the Boko Haram insurgency.
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