By Adewale Sanyaolu
Last week’s sack of the management of the Benin, Kano and Kaduna Electricity Distribution Companies (DisCos) by the Nigerian Electricity Regulatory Commission (NERC) and the Bureau of Public Enterprises(BPE) has sent jitters down the spines of power services providers across the country.
Both NERC and BPE had hinged their decision to sack the management of the three DisCos to financial insolvency and technical incapability of the power firms.
According to the two agencies, the three utility firms were considered to be technically incapacitated and financially insolvent after their loan facilities from Fidelity Bank became unserviceable.
NERC and BPE had earlier sacked the managements of Ibadan, Abuja and Yola DisCos in similar circumstances. This brings to six out of the 11 DisCos in the country whose management have been sacked.
Currently, the companies’ debt owed to banks stands at about N819.97 billion as of last year.
The National Bureau of Statistics (NBS) had, in 2020, put non-performing loans (NPL) in the power sector at N33.22 billion out of N1.23 trillion NPLs recorded by banks. On the other hand, Ministries, Departments and Agencies (MDAs) debt to the DisCos was put at over N90 billion.
Executive Director, Research and Advocacy of the Association of Nigerian Electricity Distributors (ANED) in January said the indebtedness of MDAs had lingered and that the unpaid bills had been increasing since November 2013
For his part, the Managing Director of SpeedPower Nigeria Limited, Taiwo Adekola, observed that some more DisCo management may be sacked in the months ahead over similar reasons that their counterparts were shown the way out.
Adekola, lamented that some DisCos are on life support and needed to be shown the big stick before they would eventually collapse, since majority of the investors are now unease as they have commenced talks with their creditors on how to service their loans.
He argued that some of the investors lack the requisite technical capacity to run a sector as complex as the power industry because they are just briefcase investors and rent seekers.
‘‘It is now obvious that the privatisation of the power sector on November 1, 2013 was a fraud. A lot of those that bought the asset were rent seekers who had little or no idea about what the power sector was all about.
Majority of them had little or zero equity in the assets. Over 95 per cent of the monies used to acquire the assets were bank loans. So how do you expect them to take the business serious. The result of that faulty exercise is what we have on our hands today, adding that those who supervised the sale of those assets to their friends and cronies should be in jail by now because the sector is today worse off than it was when they took over’’.
Also commenting, Managing Director of Tripod Industrial Services Limited, a firm that specialises in power generation and distribution infrastructure, engineering, procurement and construction, Mr. Ademola Raheem, blamed both government and the power investors for the current crisis in the sector.
He said the so- called unbundling and privatisation of the electric power sector was originally a fraud, as government having privatised a business shouldn’t have gone ahead to give them working capital a few months after privatisation.
He noted that the government ought to have conducted a techno-commercial audit of the sector to know the volume of CAPEX that would be needed before thinking of privatising. The government, he added, should have implemented the pre-paid meter roll-out before handing over to the new owners.
‘‘The idea of DisCos rejecting power from TCN and collecting money for services not rendered would not have arisen. This has put TCN/NBET into heavy indebtedness to the GenCos.
The new owners also should have been given a timeline to conduct an audit of their network equipment and customers base to know areas of improvement. Up until now, I doubt if any of the DisCos know the number of customers connected to their networks. Also, the privatisation policy should have been structured in such a way that the DisCos would have some level of freedom to determine the appropriate tariff that would encourage them to invest in the upgrade/expansion of their distribution networks and equipment’’.