Nigeria: Discos Express Reservation About Govt's Reported Plan to Repossess Electricity Firms

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Nigeria's electricity distribution companies (DISCOs) doubt the federal government will pay N736 billion to core investors to repossess the electricity companies.

Recent reports said the federal government was considering taking over some or all of the DISCOs it has described as "technically insolvent" or "failed investors" as a "solution" to the country's power supply problems.

The Punch newspaper reported that 17 of the 27 power generating stations across Nigeria have been forced to shut down some of their operating units following low demand by DISCOs and worsening electricity supply experienced by millions of electricity customers.

Citing a power ministry document, the newspaper said more than five years after privatisation, the 11 DISCos are not able to improve customer service and meet operational costs.

The newspaper reported that total power generation dropped further from an average of 3,580.5MW to 3,264.4MW on August 12, and 2,842.1 MW last Thursday.

The government is yet to name those DISCOs it describes as non-performers or failed investors.

But, the Association of Nigerian Electricity Distributors (ANED) has said despite the commitment of its members to solve the challenges affecting retail electricity distribution in the country, they are convinced government has shown a similar commitment.

The Executive Director, Research & Advocacy of ANED, Sunday Oduntan, dismissed the report the federal government would settle N736 billion owed the investors before repossessing the DISCOs.

"The federal government and the electricity distribution company investors remain committed to working in partnership with government to address the current challenge of retail electricity distribution, as evidenced by the recent Siemens initiative and recent regulatory activities," Mr Oduntan said.

He said other efforts that prove the collaboration of DISCOs and the government include the ongoing Meter Asset Providers (MAP) programme, the distribution franchise consultations, the present wrap-up of the minor electricity tariff reviews, among others to provide affordable and consistent power supply for electricity customers.

He called for respect for sanctity of contract by the government, as well as increased regulatory and policy certainty, to provide the enabling environment.

This, he said, will make the Nigerian Electricity Supply Industry (NESI) commercially viable and sustainable, and attract the needed investments that continue to elude the sector.

He described the report on government's plan to pay N736 billion to investors prior to repossessing the DISCOs as sensational.

"To do so within the provisions of the Share Sale Agreement signed by the DISCOs and government will require a sum in the region of $2.4bn (about N736bn), some of which will be paid as compensation to the failed investors.

"This is not a desirable outcome. It is noteworthy that government is yet to pay the investor in Yola DISCO for its negotiated return to government," he said.

Mr Oduntan expressed doubts about the power ministry document.

"We are troubled that a sector that is already bedeviled with multiple challenges now has to deal with sensationalist and irresponsible journalism rather than an informed discussion of how we can move the sector forward," he said.

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