The Federal Government of Nigeria is set to take over Yola Electricity Distribution Company (Yola DisCo), as the Nigerian Senate approved the sum of N26.9 billion as a refund for the acquisition of the company by private investors.
According to Punch, the House of Representatives Committee on Appropriations has recommended the payment of N26.9 billion in its report on the 2020 Appropriation Bill scheduled for consideration and adoption.
Specifically, the provision is listed as Item 188 under the Capital Supplementation component of the 2020 Budget.
FG makes U-turn? An earlier report published on Nairametrics disclosed that Transcorp Power Consortium and Quest Electricity Nigeria had won bid prices for the Afam Electricity Generation Company at N105.3 billion and Yola Electricity Distribution Company at N19 billion respectively.
The National Council on Privatisation announced that it approved Transcorp Power Consortium as the preferred bidder for the Afam Power Plc and Afam Three Fast Power Limited, and Quest Electricity Nigeria Limited as the preferred bidder for the re-privatized Yola DisCo.
It is expected that the private investors would make necessary investments to improve generation and distribution networks, as well as customer service.
This latest disclosure means the Federal Government of Nigeria has decided to take over the full possession of Yola DisCo in an attempt to fix the problems currently ravaging the distribution companies in Nigeria.
Abuja Disco, others run for safety: While the Federal Government may be taking over Yola DisCo, for now, license withdrawals of other distribution companies still looms.
In a recent publication, the Federal Government, through the Nigerian Electricity Regulatory Commission (NERC) disclosed it might withdraw the licences of eight power distribution companies (DisCos) over breaches of some provisions of the Electric Power Sector Reform Act.
According to the regulatory commission, the eight power firms include Abuja, Benin, Enugu, Ikeja, Kaduna, Kano, Port Harcourt and Yola Electricity Distribution Companies.
According to NERC, the licences of the 8 DisCos might be withdrawn due to three main fundamental reasons and these include breaching the provisions of the Electric Power Sector Reform Act (ESPRA), terms and conditions of their respective distribution licences and the Remittance Order of the year 2019.
Meanwhile, the distribution companies are jittery over the move of the government. On Wednesday, according to a report published by Punch, the Abuja DisCo (AEDC) told lawmakers in the National Assembly that it had complied with the demands of the NERC to avert the cancellation of the Disco’s licence by the NERC.
The Managing Director, AEDC, Ernest Mupwaya, stated this while making a presentation and responding to questions from the lawmakers who were on oversight function at the headquarters of the DisCo in Abuja.
AEDC also reportedly told the chairman and members of the House of Representatives Committee on Privatisation and Commercialisation that it had invested N19 billion as capital expenditure on its distribution network.
DisCos seek CBN funding for massive roll-out of meters to consumers
This, it was said will help DisCos meet the 2024 deadline which they had committed to.
A Central Bank-funded massive roll-out of meters would expedite the efforts to achieve the full take-off of the proposed Service Reflective Tariff (SRT), Electricity distribution companies (Discos) have suggested.
According to Mr Sunday Oduntan, the Executive Director in charge of research and advocacy at the Association of Nigerian Electricity Distributors (ANED), such funding would help ensure that all electricity customers are adequately metered under the Meter Asset Provider (MAP) regulation.
Oduntan, who said this in a statement to NAN on Friday, also disclosed that it would assist the distribution companies to meet the 2024 deadline which they had committed to, for metering all electricity consumers.
He recalled that Mr Ernest Mupwaya, Managing Director of Abuja Electricity Distribution Company (AEDC), had spoken on behalf of the DisCos at the House of Representatives Public Hearing on the power sector on Thursday.
According to Mupwaya, the Capital Expenditure (CAPEX) provision in Nigeria’s electricity tariff was insufficient to cover the cost of metering customers.
“Over the years, there has been insufficient investment in customer metering, due to inadequate Multi Tariff Order (MYTO) CAPEX and uneconomic tariff. The approved CAPEX for DisCos has never been adequate for comprehensive metering,” he said.
He added that the Discos were requesting CBN to provide funds for emergency mass metering projects since they no longer had a provision in their CAPEX for metering. If approved, the project would be completed within a period of 18 months.
Mupwaya added that the funding was even more necessary since no provisions had been made for metering in the event that the MAP regulation failed.
The first quarter of 2020 had seen an average monthly growth of 75,000 new customers every month, moving the number of metered customers in Nigeria above 10 million, and decreasing the metering penetration from 45.5 percent in January 2017 down to 40.3 percent in March 2020.
“Plugging the metering gap that is in excess of six million meters has been slow because even the recently introduced MAP regulations incorporate inappropriate meter pricing and so, it is not working as NERC/DisCos expected.
“The twin effects of the sudden increase in import duties of 35 percent on meter and NERC’s wrong pricing frustrated the good intentions of MAP” he noted.
He appealed to the government to grant full waivers on the 35 percent increased duty surcharged on meters, until mass metering was achieved, and to fix an appropriate and commercial price on meters.
He added that the cap on estimated billing had discouraged consumers from obtaining meters under the MAP regulation, and urged the NERC to allow Discos go ahead with estimated billing, introducing the capping only after the massive meter roll-out after 18 months.
Deals: Dangote Sugar acquires Savannah Sugar Company Limited
Dangote Sugar Refinery will henceforth assume all legal proceedings.
Dangote Sugar Refinery has been authorised to receive all the assets, liabilities and business undertakings, and property rights of Savannah Sugar Company Limited (SSCL).
This was one of the resolutions passed at the court-ordered meeting of the members of Dangote Sugar Refinery Plc held on Thursday at the Eko Hotel & Suites, Victoria Island, Lagos.
According to the notice of the proceedings sent to the Nigeria Stock Exchange, and seen by Nairametrics, Dangote Sugar Refinery “is hereby authorised to receive all the assets ((including all tax attributes, unutilized capital allowances, tax losses, withholding tax credits and any other tax refunds available subject to the approval of the FIRS), liabilities and business undertakings, including real property and intellectual property rights of Savannah Sugar Company Limited (“SSCL”) transferred by SSCL to the Company (pursuant to the Scheme of Arrangement between SSCL and its shareholders) upon the terms and subject to the conditions set out in the Scheme of Arrangement without any further act or deed”.
Dangote Sugar Refinery will henceforth assume all legal proceedings, claims and litigation matters pending or contemplated by or against Savannah Sugar.
In view of this acquisition, the court also ordered Dangote Sugar Refinery to issue and allot to the shareholders of Savannah sugar, 146,878,241 ordinary shares of N0.50 each in the share capital, for the 162,756,968 ordinary shares held by the Scheme Shareholders in SSCL.
The Scheme Document dated Friday, May 29, 2020, was also approved at the meeting, and Directors of DSR were authorised to consent to any modifications that the Securities and Exchange Commission may deem fit, and give effect to the scheme.
Dangote Sugar Refinery had earlier sent a disclosure notice to the NSE, announcing its plans to acquire Savannah Sugar Company Limited, subject to the approval of both company shareholders.
Dangote industries recently sold its flour subsidiary, and this acquisition is part of an expansion strategy for Dangote Sugar Refinery, and the next stage of its backward integration plan to revolutionize the sugar sub-sector of Nigeria’s economy.
Fairfax Africa Holdings enters purchase agreement with Helios Holdings Ltd
Fairfax Africa Holdings Corp. agreed to merge with Helios Holdings Ltd.
Canada-based Fairfax Africa Holdings Corporation has reached an agreement to merge with Helios Holdings limited, the Africa-focused private equity firm which was co-founded by Tope Lawani and Babatunde Soyoye. The purpose of the merger is to create a truly pan-African investment firm.
A statement made available by Fairfax, as seen by Nairametrics, noted that when the deal is finalised, Fairfax Africa Holdings Corporation will be renamed Helios Fairfax Partners Corporation. The company will remain listed on the Toronto Stock Exchange and the Helios co-founders will be joint Chief Executives of the new company.
The terms of the deal will also require Helios to exchange 45.6% of equity and voting interest in the new company. Helios will contribute its performance and management fees through its present and future holdings under the Helios funds, thereby making Helios Fairfax Partners Corporation one of the biggest Africa-focused asset management firms by complementing the experiences and funds of both companies under one umbrella.
The new company will also have a larger capital base for diversified investment inflows to the continent through years of experience in third-party investment management operations and the support of longer-term institutional shareholders.
The main objectives of this deal are summarised below:
- Helios Fairfax Partners Corporation to become the leading pan-Africa focused listed alternative asset manager with unique capabilities to invest across the continent
- Creates a diversified investment platform combining best in class third-party investment management capabilities with the strength of long-term shareholders in a permanent capital vehicle
- Provides an enlarged capital base, increasing capacity to invest as well as to launch additional and differentiated Africa focused asset management strategies and initiatives
- Reinforces the parties’ shared long-term commitment to be a consistent and trusted provider of capital to growing African businesses across market cycles
- Tope Lawani and Babatunde Soyoye, the co-founders and Managing Partners of Helios Investment Partners LLP, will become joint CEOs of the combined holding company, enabling the company to build on the track record they have established over the last 15 years
In his remarks, Tope Lawani disclosed that the deal will offer emerging market investors the opportunity to gain exposure to the continent through their portfolio.
“We take a long-term view on our investments, and many have proved resilient even in this pandemic with a number of our investments in sectors such as telecommunications, payments, and food,” Lawani said.
He added that the transaction will offer Helios access to permanent capital from equity markets that can be used to accelerate its product and growth strategy.
Helios, which was founded in 2004, has raised third party private capital for the past 15 years investing in Africa companies including First City Monument Bank (exiting in 2013), Interswitch, Vivo Energy and Helios Towers Plc.
Fairfax was founded by Canadian Billionaire Prem Watsa and will own 45.6% of the Helios Fairfax Partners Corporation. Before the merger, Helios was raising $1.25 billion for its Africa focused fund and had landed a commitment of $100 million from the U.K’s CDC Group.
You may read the full statement by Fairfax by clicking here.