Daily Trust
Some banks are working hard to take over 60 per cent stakes in some power Distribution Companies (DisCos) from the core investors for failing to repay at least N819.9 billion acquisition loans.
The Central Bank of Nigeria (CBN) in August 2021 put the acquisition loans to the power firms at N819.97bn.
The DisCos were privatised a little in 2013 after the federal government, through the Bureau of Public Enterprises (BPE), received $1.256bn as payment for 60 per cent stakes in 10 DisCos in 2013 and that of Kaduna DisCo in 2014 from investors.
The government retained 40 per cent stakes in the DisCos making it the minority shareholder.
The bureau also got another $1.269bn for the sale of six Generation Companies (GenCos), an upstream section of the power sector value chain. The two transactions amounted to $2.525bn which was put at N404bn as of November 2013 when a dollar was about N180.
Documents showed that a major part of that fund was borrowed by the investors from banks and with the official dollar to naira rate jumping to over N400 presently, the loan repayment value plus accruing interest is very high.
While the power firms grapple with the acquisition loans, they have been unable to utilise the N213bn Nigerian Electricity Market Stabilisation Fund (NEMSF).
NEMSF is a 10-year loan from CBN in 2014 to stabilise their operations.
That notwithstanding, power shortages persist as customers can’t get meters and the electricity market shortfall has climbed to over N1.7 trillion.
Presently, power generation has not improved beyond the average 4,000 megawatts (MW) daily and there is still high Aggregate Technical, Commercial and Collection (ATC&C) losses across the DisCos.
Average monthly energy remittance from the DisCos to the GenCos which improved at the initial take over stage had dropped to below 40% monthly, while over six million of the about 12 million registered electricity consumers do not have meters.
Running against time
Daily Trust has reported a series of crisis signs across some of the DisCos since the 2013 takeover.
For instance, in 2016, salary payment was an issue at Kano DisCo and since 2020, there were similar struggles at Abuja DisCo for some months when officials said the junior staff would be paid and the management would plead with senior staff to wait a little longer.
However, the most pronounced of these crises is the ownership tussle rocking the DisCos, especially Ibadan Electricity Distribution Company (IBEDC) and Abuja Electricity Distribution Company (AEDC).
The Assets Management Corporation of Nigeria (AMCON) on January 20 this year took over control of IBEDC over the inability of the DisCo to clear its acquisition loan from Skye Bank, now Polaris Bank.
A court ruling empowered AMCON to take over the asset and IBEDC immediately came under receivership.
IBEDC was acquired by Integrated Energy Distribution and Marketing Limited (IEDML), which is the same firm that acquired Yola DisCo, all in 2013, both for $160 million.
By 2015, IEDML declared a force majeure for Yola DisCo and requested the federal government to take over the DisCo citing insecurity issues in the franchise area. That DisCo only got another buyer – Quest Electricity which took it over from BPE in November 2021.
AMCON said the investors breached the Loan Purchase and Limited Servicing Agreement executed with Polaris Bank Limited (former Skye Bank) dated 30th November 2018 and a Notice of Appointment of the Receiver/Manager dated August 6th, 2021.
IBEDC had a history of such default as in 2018, the Nigerian Electricity Regulatory Commission (NERC) fined the company N50 million for “its failure to secure a refund of an interest-free loan the board of IBEDC granted to its core investor group (IEDML).”
In 2017, the DisCo diverted N6bn from its N11bn share of the N213bn NEMSF from CBN to power firms.
Abuja DisCo, or AEDC, also had issues with United Bank for Africa (UBA) over acquisition loans.
The investors under the umbrella of KANN Utility Ltd, comprising CEC Africa and Xerxes Ltd, paid $164 million to BPE to acquire the DisCo.
The two investors have had issues since 2019 over who has more of the 60% stakes due to their contributions to get the DisCo.
While the litigations were on, they got enmeshed in another collective issue with UBA over repayment of the $123m loan they got from the bank as part of the acquisition fund.
As of November, UBA moved into receivership of AEDC from KANN Utility towards recovering its loan.
Read the full story in Daily Trust
