The Federal Government has commenced the unbundling process for the 11 electricity distribution companies (DisCos) along state lines for better efficiency.
This was made known by Nigeria’s Minister of Power, Adebayo Adelabu, when members of the Senate Committee on Power, led by their Chairman, Senator Eyinnaya Abaribe, visited his ministry on Monday, April 22, 2024, in Abuja.
Adelabu, who stated that the privatisation of these DisCos would not be reversed, stressed that the power firms would be broken into more efficient structures along state lines to be able to deliver on their mandates.
He also revealed that over 100 projects of the Transmission Company of Nigeria (TCN) have not been completed since 2001, a period of about 23 years.
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Unbundling along state lines
- The minister said, “We are unbundling the Discos along state lines. Some of the Discos are too big for efficiency. They are too big for effectiveness. Ibadan Disco covers seven states. It is practically impossible for them to be efficient.
- “So we are rearranging and restructuring the Discos along state lines so that each state government will know the responsible DisCos for their states. Also, the federal and state governments should start exercising their rights in the operation and management of the DisCos because we still own 40 percent of the firms.
- “But we have left it for the private sector operators for too long and they have messed it up. So the government must come back to take over its own right in the DisCos. We are also planning to franchise the unserved communities under the DisCos.’’
FG to sell DisCos managed by AMCON, banks
The minister also revealed that the Federal Government would sell off the 5 DisCos under the management of banks and the Assets Management Corporation of Nigeria (AMCON) within the next 3 months to technical power operators.
The 5 DisCos include the Abuja Electricity Distribution Company, which is under the management of the United Bank of Africa (UBA), the Benin Electricity Distribution Company, Kaduna Electricity Distribution Company, and the Kano Electricity Distribution Company, which is managed by Fidelity bank and the Ibadan Electricity Distribution Company, which is under the AMCON management.
These DisCos are under these new managements due to their inability to repay their loans to the financial institutions.
The government stated that those who acquired the DisCos when the firms were officially privatised in November 2013, lacked the required expertise and financial capacity to run the companies.
Adelabu also said the tough decision on the DisCos has become necessary because the entire Nigerian Electricity Supply Industry (NESI) fails when they refuse to perform.
He pointed out that the ministry will prevail on the Nigerian Electricity Regulatory Commission (NERC) to revoke underperforming licenses and also change the management board of the DisCos if it becomes the solution.
- He said, “On distribution, very soon you will see that tough decisions will be taken on the DisCos. They are the last lap of the sector. If they don’t perform, the entire sector is not performing.
- ”The entire ministry is not performing. We have put pressure on NERC, which is their regulator to make sure they raise the bar on regulation activities.
- ”If they have to withdraw licenses for non-performance, why not? If they have to change the board of management, why not?
- “And all the DisCos that are still under AMCON and Banks, within the next three months, must be sold to technical power operators with good reputations in utility management.
- “We can no longer afford AMCON to run our DisCos. We can no longer afford the banks to run our DisCos. This is a technical industry and it must be run by technical experts.”