By Ono Yima
The Federal Government plans to further unbundle the electricity distribution companies (DISCOs) in the countries. According to the Minister of Power, Adebayo Adelabu, their coverage areas are too big, which makes them practically impossible to manage.
He further said that the operation of our power sector has been left in the hands of the private sector and they have messed it up. He revealed that part of the plan underway is to franchise unserved areas under the DISCOs.
“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 Disco 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 per cent in 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”
He stated this while addressing the Senate Committee on power; led by its chairman Enyinnaya Abaribe, when then they visited him in his office as part of their oversight function.
In addition, he informed the committee that the Federal Government is transforming the DISCOs, with more regulations, including sanctions on the DISCOs for non compliance by the Nigerian Electricity Regulatory Commission (NERC), and the additional franchising policy to be put in place in the sector.
“We will start seeing regulations about franchising. The fact you are Eko Disco doesn’t mean that you cannot have smaller Discos that are ready to invest in your unserved communities. So we are looking at franchising.”
“We are transforming the Discos and very soon you’ll see that a lot of tough decisions will be taken against these Discos because they are the last mile in the sector. If they don’t perform then the entire sector is not performing.
“So we have put pressure on NERC to make sure that it raises the bar on the activities of the Discos. If It (NERC) has to withdraw licences for non-performance, why not? If It has to change the boards and managements, why not?
“And all the Discos that are still under AMCON (Asset Management Corporation of Nigeria) and some lenders (banks), within the next three months they must be sold to a technical power operator with a good reputation 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,”
Currently, United Bank of Africa (UBA) is managing Abuja Electricity Distribution Company; Benin Electricity Distribution Company, Kaduna Electricity Distribution Company, and Kano Electricity Distribution Company, are under Fidelity Bank; while AMCON manages Ibadan Electricity Distribution Company.
These Discos are under these financial institutions because they have been unable to pay their indebtedness to them.
The Senate Committee on Power criticized the Discos for their inefficiency since acquiring privatized assets over a decade ago, demanding a complete overhaul of the power firms.
In his words, Senator Danjuma Goje, a member of the committee, said, “the Discos have not added anything significant to the power sector, but are just going about collecting money.
“The Discos are complete failures and should be overhauled. They have failed to live up to expectations and we have so many complaints about their poor performances.”
The Senator’s view captures the feeling and frustration of almost all Nigerians and anybody living or doing business in Nigeria since the Private sector took over the Power assets during the privatization exercise by the Federal Government.
The handover of the assets to the Private sector was done in a bid to make the power sector more efficient. However, at the present, the efficiency of the sector is even lower than before the privatization. It could be said to be totally non performing; and the fear is that the sector could collapse anytime now.
The Power minister is not lost on the problem of the sector, “Our problem started from the privatization era. Not that the privatization has a problem in itself, but its implementation and execution have robbed the process of its laudable objectives.
“We believe that people who bought the power companies do not have the required expertise to run the utility firms. Secondly, they were not buoyant enough in terms of financial buoyancy to pay for the power plants.
“All of them used bank loans to pay for the assets. And we all know that the power business is a long-term business. It is not something you recoup your capital and make profit in a short time. So they were all under pressure to repay the bank loans that they used to acquire the power companies.
“This is why today a number of them have been taken over by their lenders, either AMCON or the banks, both local and international banks. They also promised to invest and enhance the distribution network, but they did not do this.”
On power generation, he gave further insight.
“Today we have a total of 13,250MW installed capacity in all the generating units, including hydro plants and thermal plants. If we add the 700MW coming from the recently Zungeru plant we will have close to 14,000MW installed capacity.
“But it is sad to let you know that the highest we have ever generated in this sector is 5,800MW out of an installed capacity of over 13,000MW, which is less than 50 per cent. The infrastructures are there lying fallow without adequate maintenance and the turbines are getting rusty.
“Two things are responsible, which include the inadequate transmission capacity to evacuate this power even when it is generated. The second thing is the inadequate demand coming from the Discos because they are not getting full payments from the consumers when they distribute power to them.”
The inefficiencies in the power sector remain the albatross of the Nigerian social and economic growth.