By Bassey Udo
The ownership and management of three electricity distribution companies were restructured to reflect the collateralized equity shareholding of the companies,
the Bureau of Public Enterprises (BPE) has said.
Also, the agency, which is the regulatory authority in the privatization of public enterprises, said its involvement in the exercise was to protect the 40 percent shareholding of the Federal Government in the affected DISCOs.
Following the reconstitution of new boards for the three companies to reflect collateralized shares of the core investors of Kano, Benin and Kaduna DISCOs by the Consortium of lenders, there were insinuations of alleged wrongdoings by the BPE through the action.
But, the Director General of the BPE, Alex Okoh, clarified that the privatization agency, which mid-wifed the sale of the power three power companies only acted following an information by Fidelity Bank Plc on July 5, 2022 that the collateralized shares of the core investors of the three DISCOs had been activated by the lenders.
The Lenders’ consortium, including AFREXIMbank, Keystone Bank, Stanbic IBTC, and Fidelity Bank, gave loans to the three DISCos with which they used in acquiring the shares of the privatized entities.
As a condition for the loans, the core investors agreed that on the event of their inability to meet the terms of the loans, the lenders could collateralize their equities to recover the loans.
On the basis of the information about the activation of the collateralized shares of the core investors by the lenders consortium, BPE said in collaboration with electricity sector regulatory authority, the Nigerian Electricity Regulatory Commission (NERC), announced the reconstitution of new boards to reflect the action.
Consequently, Hasan Tukur was named as Chairman of the Board of Kano DISCo, with Nelson Ahaneku, and Rabiu Suleiman as members, while Benin DISCo had KC Akuma as Chairman, with Adeola Ijose and Charles Onwera as Member.
The Board for Kaduna DISCo had Abbas Jega as Chairman, and Ameenu Abubakar and Marlene Ngoyi as members.
BPE, which represents the Federal Government’s interest in the Boards, nominated Bashir Gwandu as independent Directors for Kano DISCO; Yomi Adeyemi (Benin DISCO), and Umar Abdullahi (Kaduna DISCO), to represent the Federal Government’s 40 percent interest in the three DISCOs during the transition period.
In clarifying BPE’s role in the entire process, Okoh said the privatisation agency was only exercising a contractual and commercial intervention between the core investors in these DISCOs and the Consortium of lenders, while protecting the Federal Government interests in the DISCOs.
“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,” Okoh said.
He said the lenders have also assured BPE and NERC that they would participate fully in all the ongoing market initiatives aimed at improving the sector, including the National Mass Metering Programme.
To ensure the objective of the power sector privatization exercise was derailed, the BPE Chief said it was envisaged that the majority interest in the three DISCOs would be sold to other competent private sector investors with the requisite technical and financial capacity to re-capitalize and manage these entities efficiently.
As an interim measure, he said NERC and BPE met on an Emergency Basis and activated the Business Continuity Process and appointed interim Managing Directors in the affected DISCos, namely Kano DISCO (Ahmad Dangana), Benin DISCO (Henry Ajagbawa), and Kaduna DISCO (Yusuf Usman Yahaya).
Okoh criticized the core investors in the affected DISCOs over their reactions to BPE’s intervention, describing them as “quite disingenuous.”
Beyond the financial issues, Okoh said the affected DISCOs happen to be the worst performing among all the operators in the sector.
“Ibadan is currently being managed by a so-called Receiver Manager as a sole administrator. 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”, Okoh said.
Notwithstanding the challenges, Okoh said the Federal Government through the BPE remains fully committed to ensuring optimal performance in the power sector and would not shy away from taking the necessary decisive actions to achieve this objective.