Abuja — The Bureau of Public Enterprises (BPE) on Monday said the government was scarred of allowing new monopolies to emerge in Nigeria's power sector and expected core investors who own 60 per cent equity in the country's electricity distribution companies (Discos) to divest parts of their shareholdings to new investors to raise capital for their upgrade.
The privatisation agency explained that the government was also not comfortable with the idea of selling parts of its 40 per cent equity in the Discos as frequently requested by their core investors, stating clearly that it would rather hold on to its shares and force the Discos to shed off theirs instead if they wanted to raise equity financing as against debt to upgrade their operations.
The Director General of the BPE, Mr. Alex Okoh, stated at a stakeholders' and investors' forum organised by the agency in Abuja, that conversations on how the Discos could upgrade their operations were ongoing between it and them, and that options such as getting them instead of the government to sell parts of their shares were on the table.
Okoh said: "We are having very robust engagements with the Discos especially because we sold the assets and hold the government's 40 per cent interest in all of the Discos. We see our role as collaborative and to also engage our government counterparts for them to see the realities of the Discos businesses and accommodate a consideration of appropriate pricing or tariff for power.
"Cross sectorally, all the agencies that are involved in supervising the power sector are discussing to ensure that we are able to build a framework that allows for efficient service delivery and cost recovery for the investors in the sector.
"We've proposed that there should be a coordinating body for all of those agencies in government responsible for the power sector reforms and that the agency should be in constant conversation with operators."
Asked if the conversations included getting the Discos to sell their shares and how long the conversation had gone on, Okoh said: "We are not taking any options off the table. If the Discos currently because of the way their balance sheets are compromised, are not able to raise sufficient capital to improve the distribution network and provision of meters, then we have to look at the possibility of how to admit other investors who may have the capacity financially and other technical expertise to improve the distribution infrastructure.
"We cannot continue to have a situation where the general populace is receiving the wrong end of the stick all the time. What the general public want is improved power supply and power delivered at a reasonable cost, all of the stuff going with the government and Discos, they don't give a hoot about that, they want power.
"So, in meeting the expectations of the public, we as far as government, are not taking any options off the table including admitting new investors who have the capacity."
He admitted that the power privatisation had not lived up to expectations, but noted the government was cautious of selling its 40 per cent shares in the Discos because it still felt the core investors could become monopolies if it gave up its shares in the Discos.
"Power is a strategic utility, and government at this time is not comfortable to totally divesting the interest in such an essential core utility. We had proposed that over time as we see the performance of the new private sector investors holding 60 per cent in the Discos and their commitment to providing this key public utility over time, then government can systematically divest its interest but we have to be in a position that we are comfortable with how this key utility is being run, if not there is the possibility that government will be held hostage by the private sector people as far as that is concerned because a responsible government cannot wake up and not explain reasons for a blackout," he said.
On how the BPE rated the power privatisation so far, he said: "Well, it hasn't achieved its full objectives, I will be the first to admit that and there are various reasons. There are industry issues some of which relate to the price of power, the tariff.
"Some of them also have to do with the efficiencies of the current operators of the Discos in terms of how they enumerate the customer base of their franchise areas, how they are able to meter the customers so that people pay for use rather than estimated billing."
"There are infrastructural issues around transformers. The distribution infrastructure needs to be upgraded, and until we are able to pull all of these various aspects that contribute to the efficiency of the power sector, it will be very difficult to determine what appropriate pricing for tariff should be.
"I agree that tariff is not at the level it should be to compensate for the cost of delivering that service now, but the issue is, have we been able to properly assess what the actual cost should be if we factor in the efficiency that the Discos bring into the system. It is only after we have done that empirically that we know the shortfall," he added.
Okoh equally assessed the performance of other government companies that had been privatised but not doing so well, and explained the government had no intention of taking them back for resell to new investors.
He said in these regards: "We cannot resell, it is not re-privatisation, it is already owned by the core investors, but if they make that strategic decision to admit additional investors, that will be fine. And, if they admit that liquidity is the challenge and the way they want to solve it is through equity and not debt, then they can admit investors, but if it is a debt solution, then we can approach the banks - the BoI and others."