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Fresh concerns over govt’s shares in Discos

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Minister of Power, Works and Housing, Babatunde Fashola (right); Governor of Central Bank of Nigeria, Godwin Emefiele; Deputy Governor, Economic, Policy, Directorate of the CBN, Dr. Sarah Alade ; Acting Chairman, Nigerian Electricity Regulatory Commission, Dr Tony Akah and Managing Director/Executive Officer of the Nigerian Bulk Electricity Trading Company (NBET), Rumundaka Wonodi during the fourth batch disbursement of the apex bank’s loan to the Nigerian electricity market stabilisation facility in Lagos at the weekend

Minister of Power, Works and Housing, Babatunde Fashola (right); Governor of Central Bank of Nigeria, Godwin Emefiele; Deputy Governor, Economic, Policy, Directorate of the CBN, Dr. Sarah Alade ; Acting Chairman, Nigerian Electricity Regulatory Commission, Dr Tony Akah and Managing Director/Executive Officer of the Nigerian Bulk Electricity Trading Company (NBET), Rumundaka Wonodi during the fourth batch disbursement of the apex bank’s loan to the Nigerian electricity market stabilisation facility in Lagos at the weekend

• Stakeholders want Finance Ministry on board
• Fashola assures of incremental, steady power supply
• Why we can’t sell shares now, by BPE

In the light of the continuing poor performance of privatised electric power utilities and the liquidity issues bedeviling their operations, there are fresh concerns over the effectiveness of government’s performance agreement with the new owners of distribution companies (Discos).

There is also worry about the state of the 40 per cent shares in the privatised 11 distribution companies.

Meanwhile, Power, Works and Housing Minister, Mr. Babatunde Fashola SAN, has again assured the nation that incremental, steady and eventual uninterrupted power supply is achievable in the country.

He, however, said it could only happen if the citizenry cooperate with the government by taking ownership of and protecting the various power supply facilities across the country.

Fashola, who spoke to reporters in Lagos after delivering a keynote address at the Nigeria Urban Design Forum 2016 at the LCCI Conference Centre in Ikeja, said government was ready and willing and had mapped out its programme to take the country to incremental power supply from where it would move to steady power and ultimately to uninterrupted power supply.

The minister who was responding to questions on why power generation had gone down explained that the only way government could realise its programme was if those involved stopped some of the practices like cutting gas pipelines through which gas for the supply of over 80 per cent of electricity to the whole country goes to the various gas plants across the country.

“But one of the things we should stop doing is to stop cutting gas pipelines and all of you must sensitise all of those who are involved because that’s why supply is down”, he said.

While a section of the Nigerian Electricity Supply Industry (NESI) is concerned that the private sector owners of the Discos are living large and not declaring any dividend to government, another group accuses  the Bureau of Public Enterprises (BPE), which represents government on the Discos’ boards, of not doing enough to enforce the Performance Agreement (PA) entered into as part of privatisation.

Government on November 1, 2013, handed over the distribution companies and the generation companies to private investors. While government sold some of the plants 100 per cent , it retained 40 per cent shares in the distribution companies.

The Bureau of Public Enterprises (BPE) on behalf of the Federal Government signed the Sale Purchase Agreements (SPA) and Performance Agreements (PA) with the new owners of Power Holding Company of Nigeria (PHCN) successor companies which contain some minimum performance standards to be achieved by the new owners.

The Nigerian Electricity Regulatory Commission (NERC) and BPE have a common goal in ensuring that the companies achieve high standard in performance. Both agencies also set up joint monitoring teams.

BPE represents the Federal Government on the board of the distribution companies while the Performance Agreement provides it with the basis for its monitoring role.

There is increasing concern in government circles, especially considering that the utilities have not lived up to expectation.

BPE is also accused of not adequately representing government’s interest and not doing enough to enforce the performance agreements.

A highly placed ministry source told The Guardian: “It is double standard for BPE to participate in the board decisions of the distribution companies as shareholders while also tasked with monitoring the performance of the Discos.  There is no way distribution companies can be well monitored to ensure improvement in electricity supply this way.”

The source explained: “It is clear that if there is any violation by the Discos on regulations, the BPE is accountable by 40 per cent. BPE has a formidable block to insist that the Discos must abide by government regulations. Maybe the Ministry of Finance should hold that portfolio, but not BPE. There seems to be some level of compromise. As board members, BPE officials receive allowances from the Discos. How can they stand firm and speak out?”

On specific cases of alleged infractions against BPE, another source told The Guardian:  “They are there when board decisions are made, and when Discos decide that they won’t give free meters… BPE has never given any unbiased reports about the performance of the Discos. You can go and confirm from NERC. It is not proper. Fundamentally, they should not be the ones representing the Federal Government. They should leave that to the Ministry of Finance.”

It was also learnt that NERC has completed a preliminary report on the valuation of state government shares and handed it to BPE, preparatory to the sale of the remaining government’s shares in the Discos.

But Head, Public Communications at BPE, Alex Okoh, refuted accusations of laxity. He insists that BPE ensures good corporate governance as representatives of government on the board of discos.

His words:  “The 40 per cent shares are intact, the government will dispose some of them when the distribution company is stabilised. Remember 10 per cent of them are for the workers; and parts of those shares are also reserved for states for their legacy investment in the power sector.
“The Discos have not been declaring profits because they are still working on upgrade of their facilities and equipment for optimal performance. Don’t forget they were operating with non-cost reflective tariff until February 2016.”

Speaking on the issue, Director of Research and Advocacy at the Association of Nigeria Electricity Distributors (ANED), Sunday Olurotimi Oduntan, stressed that the utilities were running on a deficit, and that the BPE had been actively playing its monitoring role.

He told The Guardian:  “The government shares are active, very active.  BPE has been monitoring us, I don’t know if monitoring is the word. The BPE is very active on the board. They know the business; they see the reality, and they have been part of everything that we do.

“We have not declared any profit yet. We are all running in deficit. If you ask me, it is government that should be coming with money to fill the funding gap. Government knows.  People in government are not stupid.  If I have 40 per cent in your business and you have 60 per cent and I have something to take from the business as the business progress, you need not ask me.  What we should be talking about as regards this sector is that we are on a journey, a very long journey and we are on step two out of five steps. Until we get to step four or five, it is not significant, yet.”

The General Secretary of the Union of the National Union of Electricity Employees (NUEE) , Mr. Joe Ajaero, also faulted BPE’s presence on the board of Discos.

He told The Guardian: “There seems to be some controversy over the 40 per cent remaining shares. Have those Discos been declaring profit for the 40 per cent shares held by government?

“BPE has done more harm to Nigeria.  It is more of an agent of pain and sorrow to Nigerians, especially the workers. So, their stay there continues to hurt the interest of the working masses and Nigerians.”

On the initially planned shares for workers, he lamented: “There is currently no consensus on the 10 per cent due to workers. BPE says it is 10 per cent of the remaining government shares.  What they are now trying to tell us is that it is 10 per cent of the remaining 40 per cent , which is not acceptable to us.  These are some of these of the battles that we are having right now.”


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