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Wednesday, May 22, 2024
BUSINESS

Govt to sell Abuja, Ibadan, Benin, Kaduna, Kano DisCos

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• Banks, AMCON lack capacity

• Fed Govt revokes $200m metering contract

The Federal Government yesterday vowed to sell off the five electricity Distribution Companies (DisCos) as blackout persists.

A $200m non-performing metering contract awarded since 2021 has been revoked by the Federal Government.

Minister of Power Adebayo Adelabu said banks and the Asset Management Company (AMCON), which have been managing these DisCos, having taken over because of the failure of the management to repay loans, lack the technical capacity.

The sale to reputable technical power operators is expected to be completed within three months, he added.

Those affected are Abuja Electricity Distribution Company (AEDC) under the management of the United Bank of Africa (UBA), Benin Electricity Distribution Company (BEDC), Kaduna Electricity Distribution Company and Kano Electricity Distribution Company manage by Fidelity Bank, Ibadan Electricity Distribution Company (IEDC) is under the AMCON management.

Investors hold 60 per cent of shares in the DisCos. The Federal Government holds the remaining 40 per cent.

Blackout has persisted in most states with DisCos blaming low allocation from the national grid and gas shortages to generating companies (GenCos) as the causes, among others.

Consumers are lamenting that the epileptic power situation has worsened since January.

Adelabu spoke while hosting the Senate Committee on Power at his office in Abuja.

He said that the energy distribution assets are technical and should be managed by experts.

He informed the committee that tough decisions on the DisCos have become necessary because the entire Nigerian Electricity Supply Industry (NESI) fails when they refuse to perform.

According to him, the ministry will prevail on the Nigerian Electricity Regulatory Commission (NERC) to revoke underperforming licenses and change the management board of the DisCos if necessary.

Adelabu said: “On distribution, very soon you will see that tough decisions will be taken on the DisCos. They are the last lap of the sector. If they don’t perform, the entire sector is not performing.

“The entire ministry is not performing. We have put pressure on NERC, which is their regulator to make sure they raise the bar on regulation activities.

“If they have to withdraw licenses for non-performance, why not? If they have to change the board of management, why not?

“And all the DisCos that are still under AMCON and banks, within the next three months, they must be sold to technical power operators with good reputations in utility management.

“We can no longer afford AMCON to run our DisCos. We can no longer afford the banks to run our DisCos. This is a technical industry and it must be run by technical experts.”

The minister also noted that it has become necessary to reorganise the DisCos for efficiency.

He stressed that Ibadan DisCo is too large for one company to manage.

Responding to the decision to resell the DisCos, a member of the committee, Senator Isah Jibrin, alleged that some of the operators have stripped the assets of the DisCos they took over in 2013.

He insisted that the operators of any revoked DisCo must be compelled to fix the assets as they were prior to handover.

Adelabu said the Federal Government mobilised a company named Messr Zigglass with $200 million (N32 billion) to supply three million meters, but that the firm is yet to deliver.

“If you held N32 billion for these years, where is the interest?” he asked.

According to him, President Bola Ahmed Tinubu has directed that the contract be revoked.

He said the government will bridge the current eight million metering gap in the next four to five years.

The minister noted that the funding is coming from a seed capital of N100billion and N75billion.

He added that the Nigerian Sovereign Investment Authority (NSIA) is coming to the aid of the ministry with the fund.

Adelabu blamed issues in the industry on uncompleted projects, urging the committee to approve funds for the completion of over 120 projects across the country.

He also noted that the frequent grid collapse was due to a lack of Supervisory Control and Data Acquisition (SCADA).

Committee chairman, Senator Eyinaya Abaribe, said the ministry had been complaining about SCADA procurement in the last 12 years without addressing it.

Senator Danjuma Goje, a member of the committee and a former Minister of Power, told Adelabu that nothing has changed in the sector.

Senator Lalong, commenting on the company that abandoned a project after collecting $200 million since 2021, said people must be punished for their crimes to serve as a deterrent to others.

Senator Osita Ozunaso called for the cancellation of the DisCos licenses, stressing: “DisCos are the problem.”

Senator Neda Imasuen said since the present managers of the power sector have failed over the years, the government should hand them over to new ones or even foreigners.

TCN seeks funding, other support

The same committee visited the Transmission Company of Nigeria (TCN), where the Managing Director, Sule Abdulaziz, urged the members to assist in raising funds for the completion of over 120 projects.

He urged the committee to also help in addressing the issue of right of way.

The TCN boss called on the committee to make a law that would give right of way to the projects.

According to him, vandalisation is a huge challenge hampering projects in the Northwest and Southeast.

He explained that the company is collaborating with a Chinese firm to build a super grid.

He said the N2 billion that TCN gets from the 2024 budget allocation can only pay compensation, pleading for an increased budget.

He added that there is a need for funding for new substations.

‘Gas a constraint’

Independent System Operator (ISO) Executive Director, Nafisat Ali, explained that gas has become a major constraint in the industry.

“Today there is no gas. We need gas,” she said.

She said the DisCos were still rejecting load despite the power shortage in the country.

“The DisCos don’t abide by allocation. That is the challenge,” Ali said.

Adelabu had earlier informed the committee that the Federal Government owed the Generation Companies over N1.3trillion and the gas suppliers $1.3billion.

He said the gas suppliers have refused to provide more because of the debt.

The minister urged the committee to address the debt matter.

Addressing reporters at the end of the visit, Abaribe noted that the committee would interface with the Federal Government to settle the gas debt.

He said: “Every option for us is on the table. If the option is for us to interface with the Federal Government to do their part, because it is a debt, so they have to pay their debt, we will do so.”

He said he would not doubt the minister that the World Bank SCADA project will be completed in two years.

According to him, the committee will focus its oversight on the ministry and the TCN concerning the World Bank project implementation.

He noted that the committee has invited NERC and other stakeholders to answer some questions on April 29 on the tariff review.

The chairman said the committee would revisit the penalties on power assets vandalisation.

Source: The Nation