Nigerian Govt Names Committee to Review Ownership of Electricity Firms

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21 November 2019

The federal government on Thursday in Abuja inaugurated an ad-hoc committee to undertake the review of the status and ownership structure of the power distribution companies (Discos).

The committee was constituted by the National Economic Council (NEC) presided by Vice President Yemi Osinbajo.

Members of the committee include the Kaduna State Governor, Nasir El-Rufai, and his counterparts representing the six geo-political zones.

The committee will also include representatives from the National Council on Privatization and the Bureau for Public Enterprises (BPE).

Hints about review

The plan to review aspects of the privatization of Nigeria's power industry assets has been on since October 2017.

President Muhammadu Buhari had said such a review would allow his administration to restructure the ownership and capacity of the power sector infrastructure to enable them to deliver value to the people.

Although the president gave reasons why his administration cannot cancel the privatisation of the power sector, he said owners of the power plants who do not demonstrate sufficient capacity to operate their licenses would be compelled to cede their stakes to new investors.

The arrangement, he said, would help open up the sector for new investors to bring in fresh capital to make the plants more functional.

Negotiations were to commence with power generation companies (Gencos), one of the areas where Nigeria has difficulties in ensuring adequate power supply.

Last year, the director general of the BPE, Alex Okoh, identified the challenges of the power sector to include improper tariff and inadequate infrastructure.

Declining capacity

In recent times, the power generation and distribution companies have been having disagreements with different agencies of government on why they have been unable to deliver on the terms of their various power purchase and sales agreements.

The issues range from poor remittances of revenues for electricity consumed and inadequate funding for infrastructural development.

Last week, the GenCos threatened to shut down the power generation plants across the country to protest alleged illegal activities of the Nigerian Bulk Electricity Trading Company (NBET).

The Executive Secretary of the Association of Power Generation Companies (APGC), Joy Ogaji, accused NBET of "unilaterally and arbitrarily" imposing a 0.75 per cent administrative charge on all gas and transportation cost invoices collated and submitted to the Central Bank of Nigeria (CBN) for payment.

The Discos have also in the past mentioned low electricity tariff approved by the government and non-payment of electricity fees by many Nigerians as factors affecting their productivity. They engaged the former power minister, Babatunde Fashola, in public exchanges after the latter repeatedly criticised them openly for poor performance.

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