FG Comes up With Action Plan for Takeover of Distressed Discos

Minister of Power, Works and Housing, Mr. Babatunde Fashola
Minister of Power, Works and Housing, Mr. Babatunde Fashola

Chineme Okafor in Abuja

The Power Sector Recovery Programme (PSRP) recently developed by the federal government and the World Bank to revive Nigeria’s ailing power sector, has come up with an action plan for the sweeping restructuring of the 11 electricity distribution companies (Discos) that would enable government to take over any Disco found to be insolvent.

Details of the action plan, which THISDAY got from a workshop organised by the Ministry of Power, Works and Housing to educate the media on the expected workings of the PSRP, indicated that the government is planning to restructure the Discos to meet their responsibilities in the country’s privatised electricity market after a thorough forensic review of their operations.

The workshop was held on Wednesday evening in the ministry in Abuja. It had in attendance the Minister of Power, Works and Housing, Mr. Babatunde Fashola, the two ministers of state – Mr. Mustapha Shehuri and Mr. Suleiman Hassan – as well as heads of parastatals in the ministry, all of whom took time to explain the government’s plan in the PSRP.

The report further made recommendations for the Nigerian Electricity Regulatory Commission (NERC) to engage the Discos on revised business plans, which will be negotiated, finalised and implemented.
It also requires the government to “start the process of restructuring Discos that are found to require new capital injections”.

“This would involve NERC, BPE (Bureau of Public Enterprises), the Discos and other relevant parties. This may also involve the takeover of Discos with degraded financial positions,” said the PRSP report.
It however explained that before the takeover, technical competence reviews including forensic audits of all the Discos and the adequacy of their technical partners, should be undertaken to ensure that they had not failed in their initial agreements with the government after the privatisation exercise.

The document also revealed that there was an ongoing audit of the performance agreements and all direct agreements the government signed with operators in the sector to ensure that it was in compliance with its obligations.
It explained that there should also be measures to address the operational challenges of the Discos, which should include: “Develop case studies to determine the level of load rejections in the network, develop investment plans with clear impact analyses for increase in load across the network and in metering, and ensure regulatory measures are enforced.”

Also at the workshop, the Managing Director of the Nigerian Bulk Electricity Trading Plc (NBET), Dr. Marilyn Amobi, debunked claims by the Discos through their umbrella association, the Association of Nigerian Electricity Distributors (ANED), that the electricity they distribute to Nigerians at an average of N31 per kilowatts hour (kWh) is retailed to them at N68/kWh.

Amobi, in her response to a question on how much the NBET really sells the electricity it procures from the generation companies (Gencos) to the Discos, stated that its retail price per kWh of electricity to the Discos had not exceeded N18/kWh.
Meanwhile, NERC has invited car dealers in the country to bid to supply it seven sport utility vehicles (SUV) for its commissioners.

The regulator, in a procurement notice it recently put out, requested bidders to supply the vehicles with specifications that include 4.6-litre engine capacity and V8 type. It equally noted that vehicles should have full options and must be 2018 models.
The commission, however, did not specify the exact make of the vehicles it wants to buy, but a price survey conducted by THISDAY on the commission’s specifications for the SUVs showed that a Toyota Land Cruiser V8 2018 model with full options currently starts from N55 million.

During the time of the Dr. Sam Amadi-led board, the commission reportedly bought Ford SUVs for its commissioners who left office in December 2015 when their tenure expired. It was not certain if the retired commissioners left with the SUVs.
In the tender notice, NERC said successful bidders would be given just six weeks from the date of the award of the contract to deliver the vehicles.

  • stevalos555

    Quit dancing ‘Discos’ and give us electric power!

  • princegab

    Fg is telling us what we are thinking about our power supply system. That way they calm down our nerves. As far as discos, gencos, imf and world bank are concerned, it’s all rhetoric.
    60% of naija’s incomes will service debt next year, the remaining 40% will barely pay leaders salaries and allowances. Tell me who is deceiving whom?

  • Gbade Akinyooye

    Pity we cannot find a solution to the power problem over the years, despite the fact that no economy can grow without adequate and constant power. Now Malaysian consultants are coming to assist with analysis and solution. Power is everything. Just like others before him,BRF cannot give us 24/7 power, the best he can/should do is to create industrial parks/zones with targeted 24/7 power supply outside the national grid to grow SMEs.Those parks/zones should be powered by dedicated gencos using renewable energy sources. The impact on this partial solution will be tremendous on the economy. Think of Ariaria market in Aba ,and similar productive sme markets all over the country with 24/7 power supply !!! .We have not started yet, POWER is everything.

    • princegab

      They are incorrigible sir.
      Nigeria is in.

    • FrNinja

      Exactly, you need industrial zones particularly in teeming cities like Ibadan, Onitsha, Aba, Kano and Benin. They don’t even need large scale power plants. A power plant of 100 MW can serve between 200-500 factories x 5 and you are talking between 1,000-2,500 factories creating anywhere between 200,000-500,000 direct jobs. Just do import substitution. Consumer goods, building materials, machine tools, auto assemblies, etc.

  • Muyiwa Adeboye

    My happiness with this news report is the debunking of the falsehood being peddled by ANED that they buy power at =N=68/KwH. This is the propaganda that this nuisance of an organisation has been spreading through the media, claiming that the DISCOs are not making profit, thus calling for a steep increase in tariff. Greedy idiots!

    • FrNinja

      They buy at 18 naira and sell at 31. Yet they cannot make money. But then what do you expect when you cannot collect from your customer. 70% of Nigerian electricity customers are not metered because the DISCOs cannot even afford to meter them (4 million unmetered customers x 50,000 per meter plus install is over 200 billion). Fashola is now trying to get the customers themselves to buy the meters (which is like a fast food restaurant asking its customers to contribute to buy it a cash register).

  • Kalofy

    About time the fraudulent transfer of public assets to Ebele Jonathan and his gang of bloodsuckers and brigands is reversed. They’ve invested nothing, and don’t have the technical/managerial expertise to run the power assets. The sooner the reversal is done, the better our lots will be.

  • lord vuga

    Takeover of distressed discos from pdp beneficiaries for reallocation to apc cronies, while we continue to wallow in “darkness” in 2017.what a country!!!

    • Wesley

      Since the PDP beneficiaries have clearly failed, dont you think it makes sense to give it to the “APC cronies”?

      Maybe the APC cronies would stop our wallowing in darkness.

      • share Idea

        Just as they turned progressing economy into into recession. Nigeria we hail thee

        • Bakwus

          Into depression…I guess.

      • stevalos555

        So far, so good eh!?… Mtcheeew!

    • austin

      There was no PDP or APC in the sharing of the power assets. That was why it was not a campaign point during the 2015 elections. PDP has always been like that. Equal opportunity sharing.