Benin, Kaduna and Kano are worst performing power utilities in Nigeria, says FG

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For not respecting the privatization agreement reached with the federal government in 2013, the Bureau of Public Enterprises has declared that the electricity distribution companies of Benin, Kaduna and Kano are the worst performing Discos among the 11 electricity distributors in Nigeria.

The BPE said that following their worst performance, the government, through the Bureau of Public Enterprises and the Nigerian Electricity Regulatory Commission, decided to sell the majority stake in the three Discos to competent investors.

BPE chief executive Alex Okoh revealed this in a statement he personally signed when reacting to resistance from some Discos to demands from Fidelity Bank and the government to take over and restructure underperforming Discos.

He said the government has decided to appoint an interim management to steer the affairs of the companies until competent investors are sought to inject fresh capital into the Discos.

For Kano Disco, the interim general manager was named Ahmad Dangana; Benin Disco, Henry Ajagbawa; and Kaduna Disco, Yusuf Yahaya.

Okoh said: “It is envisaged that the controlling interest in these Discos will be sold to qualified private sector investors with the technical and financial capacity required to recapitalize and effectively manage these entities.

“As an interim measure, NERC and BPE met on an emergency basis and activated the business continuity process and appointed interim CEOs in the affected Discos.

“It must be repeated that some of the publications of the main investors of these Discos have been quite dishonest. Beyond the financial problems that I have just mentioned, the Discos concerned happen to be the least efficient”, declared the boss of BPE.

He added, “Ibadan is currently run by a so-called escrow manager as a single administration. The escrow manager has absolutely no capacity to run a public service and has not been licensed by the regulator as the manager of a nightclub.

“Ibadan is the worst performing nightclub according to the performance evaluation review conducted in December 2021.

He said that Ibadan Disco had in fact regressed in terms of critical performance parameters, as contracted in the performance agreement signed with the office.

“In fact, the Disco under lead investor, Integrated Energy Distribution and Marketing Limited, performed less well than before it was privatized,” he added.

He said the performances of Benin, Port Harcourt, Kano and Kaduna Discos were also abysmal.

Okoh added: “It is necessary to affirm categorically that the poor performance of these Discos represents a clear and present threat to the electricity sector as a whole and that no government and responsible shareholder would sit idly by and let this situation persist”.

The Helmsman of BPE further said that despite the challenges in the sector, the government remains fully committed to ensuring peak performance in the power sector and will not hesitate to take the necessary decisive steps to achieve it.

He explained that the office considered it imperative to clarify the insinuations and statements made by some of the electricity distribution companies that were restructured following the collateralized actions of some of the Discos.

He said that, as the office had previously informed the public, BPE, which oversaw the sale of the power companies and NERC, as regulator of the sector, were informed by Fidelity Bank Plc on July 5, 2022 , that a call on the guaranteed actions of the main investors of Kano, Benin and Kaduna Discos had been activated by the lenders.

Okoh said the consortium of lenders includes AFREXIM Bank, Keystone Bank, Stanbic IBTC, as well as Fidelity Bank.

“It is important to note that the action is a contractual and commercial intervention and is between the main investors in these Discos and the lenders. BPE’s involvement is to protect the federal government’s 40% stake in Discos,” he said.

Okoh added, “On this basis, new councils reflecting this action have been constituted as follows: Kano Disco – Hasan Tukur, Chairman; Nelson Ahaneku, member; and Rabiu Suleiman, member.

“For Benin Disco, KC Akuma is the president; Adeola Ijose, member; and Charles Onwera, member; while Kaduna Disco has Abbas Jega as chairman; Ameenu Abubakar, member and Marlene Ngoyi, member.

“BPE has appointed Bashir Gwandu (Kano Disco), Yomi Adeyemi (Benin Disco) and Umar Abdullahi (Kaduna Disco) as independent directors to represent the government’s 40% stake in the aforementioned Discos, during this transition. “

He said that as an agency representing the interests of the Federal Government in Discos, BPE had already engaged with the Central Bank of Nigeria (as regulator of the banking sector) for an orderly transition.

This, he said, was also intended to ensure that lenders did not hold the secured shares of major investors in perpetuity given that they lacked the technical capacity and were not duly authorized to operating an electricity distribution business.

“The lenders have also assured BPE and NERC that they will fully participate in any ongoing market initiatives aimed at improving the industry, such as the national mass metering program,” Okoh said.

The receiver/manager of the Integrated Energy Distribution and Marketing Company had argued on Wednesday that he was the legal owner and beneficiary of 60% (control and management) of the stakes in the Ibadan electricity distribution company.

In addition, the management of Benin Electricity Distribution Company Plc had argued on Wednesday that there was no legal basis for the takeover of the company following the alleged activation of the call on its shares guaranteed by Fidelity Bank.

The two companies had revealed it in reaction to the federal government’s announcement on Tuesday that the electricity distribution companies of Kano, Benin and Kaduna were to be bought by Fidelity Bank Plc after the bank took steps to take over the advice of administration of the three Discos.

The government had also announced through its Office of Public Enterprises on Tuesday that with the takeover of Ibadan Disco by the Asset Management Corporation of Nigeria, the BPE had obtained approval from NERC to appoint an interim managing director. for the struggling power company.

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