BPE says companies’ restructuring to protect FG’s 40% interest
Ndubuisi Francis
In what they described as ‘Business Continuity Process’, the Bureau of Public Enterprises (BPE) and the Nigerian Electricity Regulatory Commission (NERC) have appointed interim managing directors for three Electricity Distribution Companies (Discos), including the Benin Distribution Company, Kano Distribution Company and Kaduna Distribution Company.
The federal government had Thursday announced the takeover of the three non-performing Discos by Fidelity Bank over the power investors’ poor financial performance.
The action aligns with the restructuring of some of the Discos whose shares have been collaterised.
The appointed interim chief executives are Ahmad Dangana for the Kano Disco, Henry Ajagbawa for the Benin Disco and Yusuf Usman Yahaya for the Kaduna Disco.
The BPE explained that the recent restructuring of some of the Electricity Distribution Companies through the collaterisation of their shares, was a contractual and commercial intervention between the core investors in the companies and their lenders.
The privatisation agency stated that its involvement was to protect the 40 per cent shareholding of the federal government in the Discos.
In a statement personally signed by him and made available to THISDAY, yesterday, the BPE Director General, Mr. Alex Okoh, said it had become imperative to clear the air on the insinuations and statements emanating from some of the DISCOs) which were restructured following the collaterisation of the shares of some of them.
According to him, it was necessary to state categorically that the poor performance of these Discos represents a clear and present threat to the power sector as a whole, adding that no responsible government and shareholder, would stand idly by and allow such a situation to persist.
He said, “The Bureau of Public Enterprises (BPE) considers it imperative to clear the air on the insinuations and statements emanating from some of the Electricity Distribution Companies (Discos) which were restructured following the collaterised shares of some of the Discos.
“As we had earlier informed the public through various publications in the print and electronic media, BPE which midwifed the sale of the power companies and the Nigerian Electricity Regulatory Commission (NERC) which is the regulator in the sector, were informed by Fidelity Bank Plc on Tuesday, 5th July, 2022, that a call on the collateralised shares of the Core Investors of Kano, Benin and Kaduna DISCOs had been activated by the lenders.
“The Lenders’ consortium include AFREXIM Bank, Keystone Bank, Stanbic IBTC, as well as Fidelity Bank.
“It is important to note that the action is a contractual and commercial intervention and is between the Core Investors in these Discos and the lenders. BPE’s involvement is to protect the 40 per cent shareholding of the federal government in the Discos.
“It was on this basis that new boards reflecting this action were constituted as follows:
“Kano Disco: Hasan Tukur (Chairman), Nelson Ahaneku (Member), Engr. Rabiu Suleiman (Member)
Benin Disco: KC Akuma (Chairman), Adeola Ijose (Member), Charles Onwera (Member)
Kaduna Disco: Abbas Jega (Chairman), Ameenu Abubakar (Member), Marlene Ngoyi (Member).”
Okoh disclosed that the BPE had nominated Bashir Gwandu (Kano Disco), Yomi Adeyemi (Benin Disco), and Umar Abdullahi (Kaduna Disco) as independent directors to represent government’s 40 per cent interest in the aforementioned Discos, during this transition.
As the agency representing the interest of the federal government in the Discos, he noted that the BPE had 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 collateralised 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.
He stressed that the lenders had also assured the BPE and the Nigerian Electricity Regulatory Commission (NERC) that they would participate fully in all the ongoing market initiatives, including the National Mass Metering Programme aimed at improving the sector.
Okoh added that it was envisaged that the majority interest in the Discos would be sold to competent private sector investors with the requisite technical and financial capacity to re-capitalise and manage the entities efficiently.
As an interim measure, he pointed out that the NERC and BPE met on an emergency basis and activated the ‘Business Continuity Process’ and appointed interim managing directors in the Benin, Kano and Kaduna Discos.
Okoh observed that some of the publications from the core investors of these Discos had been quite disingenuous, adding that beyond the financial issues he had enumerated, the companies affected happened to be the worst performing ones.
He further noted: “Ibadan is currently being managed by a so-called Receiver Manager as a sole administration. 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 privatised.”
He lamented that the performance of Benin, Port Harcourt, Kano and Kaduna Discos have also been abysmal, adding it was necessary to state categorically that the poor performance of these companies represents a clear and present threat to the power sector as a whole.
No responsible government and shareholder, he stressed, would stand idly by and allow this situation to persist.
He assured Nigerians that notwithstanding the challenges in the sector, the government remains fully committed to ensuring optimal performance in the power sector and will not shy away from taking the necessary decisive action to achieve this.
A source in the NWC said, “With this Sallah break that the national chairman is being billed to meet many stakeholders to assuage the feelings of those aggrieved.
“He is billed to meet the PDP governors, the BoT members and even former PDP governors and Atiku Abubakar once he returns to the country. It is expected that Ayu will use Sallah break to reach out to those aggrieved as well as those perceived as his friends,” the PDP source said.
