The Nigerian government on Monday said it has commenced the restructuring of the eleven electricity distribution companies (DisCos) in the country.
Nigeria’s Minister of Power, Adebayo Adelabu, disclosed this while speaking during the visit of the Senate Committee on Power to the Ministry of Power and the Transmission Company of Nigeria (TCN) in Abuja on Monday.
The government also ordered the sale of DisCos that have been taken over by banks and the Assets Management Corporation (AMCON).
Five distribution companies are currently under the management of banks and AMCON due to their inability to repay their loans to financial institutions.
The Abuja DisCo is under the management of the United Bank of Africa (UBA), while Fidelity Bank manages the Benin DisCo, Kaduna DisCo and Kano DisCo.
The Ibadan DisCo is under the AMCON management.
In November 2013, the federal government privatised 11 electricity distribution companies (DISCOs) and six generating companies (GENCOs), with the FG retaining 100 per cent ownership of the Transmission Company of Nigeria (TCN).
Addressing the Senate Committee on Power on Monday, Mr Adelabu said, “We are unbundling the DisCos along state lines. Some of the DisCos are too big for efficiency. They are too big for effectiveness. Ibadan DisCo covers seven states. It is practically impossible for them to be efficient.
“So we are rearranging and restructuring the DisCos along state lines so that each state government will know the responsible DisCo for their states. Also, the federal and state governments should start exercising their rights in the operation and management of the DisCos because we still own 40 per cent of the firms.
“But we have left it for the private sector operators for too long, and they have messed it up. So, the government must return to take over its rights in the DisCos. We are also planning to franchise the unserved communities under the DisCos,” Mr Adelabu said.
He said the decisions on the DisCos have become necessary because the Nigerian Electricity Supply Industry (NESI) fails when they refuse to perform.
He added that the ministry will prevail on the Nigerian Nigerian Electricity Regulatory Commission (NERC) to revoke underperforming licences and change the management board of the DisCos for non-performance.
“We will start seeing regulations about franchising. The fact you are an Eko DisCo doesn’t mean that you cannot have smaller DisCos that are ready to invest in your unserved communities. So we are looking at franchising. We are transforming the DisCos, and very soon, you’ll see that many tough decisions will be taken against these DisCos because they are the last mile in the sector. If they don’t perform, then the entire industry is not performing.
“So we have put pressure on NERC to make sure that it raises the bar on the activities of the DisCos. If it has to withdraw licenses for non-performance, why not? If it has to change the boards and management, why not?
“All the DisCos that are still under AMCON (Asset Management Corporation of Nigeria) and some lenders (banks), within the next three months, must be sold to a technical power operator with a good reputation 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,” he said.
Electricity Challenge
The minister stated that the electricity problem started in the era of privatisation.
“Not that the privatisation has a problem in itself, but its implementation and execution have robbed the process of its laudable objectives. We believe people who bought the power companies lack the expertise to run the utility firms. Secondly, they were not buoyant enough in terms of financial buoyancy to pay for the power plants.
“All of them used bank loans to pay for the assets. And we all know that the power business is a long-term business. It is not something you recoup your capital and make a profit in a short time. So, they were all under pressure to repay the bank loans that they used to acquire the power companies. This is why, today, a number of them have been taken over by their lenders, either AMCON or the banks, both local and international banks. They also promised to invest and enhance the distribution network, but they did not do this,” he said.
The minister added that over 100 power transmission projects have remained uncompleted since 2001.
“Since 2001 till date we have over 100 uncompleted projects of the Transmission Company of Nigeria. So when we say the government has spent so much in the sector, it is true. But all the spending has not translated to a good impact on power users.
“This is because the majority of these projects have not been completed, though some of them are 80 or 90 per cent completed. We have over 65 projects on power substations that are still ongoing since 2001, which was 23 years ago.
“We have about 62 lines of projects across the country that were started and have not been completed. And these are being affected by exchange rate calculations, inflation, variations, etc. One thing about power projects is that if they are not completed 100 per cent, you cannot energise them,” he said.
He explained that the sector’s challenges include lack of gas, poor funding, vandalism, and right-of-way issues while urging the committee to support the ministry in achieving its mandate.
In his address, the Chairman of the Senate Committee on Power, Enyinnaya Abaribe, said the Senate has authorised an investigative hearing on tariff increment.
“Senate authorised investigative hearing on tariff increment. So we will do an investigative hearing on the 29th of this month. That’s on Monday next week. We are going to be taking issues from those who are directly concerned about the tariff hike, but that will be on 29 April 2024.
“We have summoned the National Electricity Regulatory Commission. We will allow them to speak about the electricity tariff hike. The minister of power is, of course, expected to appear too,” he said.