Tracking DisCos’ insolvency

There are ominous signs that the end to the poor or epileptic electricity supply bedeviling the nation may be long in coming.
This is evident in the disclosure by core investors in the electricity distribution companies (DisCos) that they have been unable to recoup their investment in the acquired assets five years after the nation’s power sector was privatised.
The DisCos said it was not true that new investors were waiting to buy stakes in the power distribution assets, describing calls for the core investors in the power firms to invest more as irrational.
The Chief Executive Officer, Association of Nigerian Electricity Distributors, an umbrella body for the DisCos, Mr Azu Obiaya, told journalists that most of the core investors would be happy to sell off the assets they acquired in November 2013.
He said, “You may recall that at an investors’ press briefing, the chairman of Aura Energy, the investors in Jos DisCo, indicated that he was prepared to sell Jos DisCo at a discount, given the current environment.
“And I think that you can essentially project that sentiment for all of the DisCo investors; that indeed the environment that would have made their investment worthwhile is not there.
So, to the extent that it is not there, most of the DisCo investors would happily sell the assets to any interested parties to get back their money.
Obiaya said, “If you are an investor, you are certainly not going to put in additional money if indeed you are in the negative.
No rational investor operates like that; the ability to get your investment back as well as the return is why you are an investor.
So, it is irrational for people to keep asking why the DisCo investors are not putting in more money, when they cannot even recover the $1.4 billion that they already put into the acquisition.
“Just as the banks are not prepared to lend money to the DisCos for their capital investment, it is also illogical for any future investor to look at buying equity in the DisCos that have negative equity.
You cannot buy a share that is negatively determined.
In other words, why would you want to go and buy a share that is not worth the money that you are paying for it? It doesn’t make sense.” The successor companies of the defunct Power Holding Company of Nigeria (PHCN) were officially privatised on November 1, 2013 and were sold to investors that year.
But since the sector was privatised, many power users have been complaining about poor electricity supply by the distribution firms, a development that recently led to heated exchanges between the Minister of Power, Works and Housing, Babatunde Fashola, and the electricity distributors.
The power distributors threatened to quit the sector and expressed willingness to resell the firms at discounted rates.
The investor in the Jos Electricity Distribution Company Plc, Tukur Modibbo, had said, “You asked me whether we are willing to quit the business.
Now, please listen to me and put it down clearly that we bought our distribution company cash down for $82 million in 2013; we are willing to take $72 million in 24 hours and leave.” But the federal government said is not frightened by the threats made by power distribution companies to quit the power sector and resell the firms at discounts.
Senior officials of the Federal Ministry of Power, Works and Housing stated that the power distributors knew the procedures to follow if truly they wished to quit the business, adding that the government would not beg them not to exit the sector.
This ugly development certainly does not augur well for a beleaguered sector that has defied all measures and policies including privatization to buoy it up towards optimal functionality and vibrancy.
It is regrettable that Nigeria’s power sector is still tottering after gulping over N3.2 trillion prior to its privation for a mere token of N404 billion in 2013.
Nigeria’s ranking as the second worst nation in power supply in 2017 is as unacceptable as it is deplorable.
A recent report by the Spectator Index of the world’s worst electricity supply in 2017 said of the 137 countries examined, Yemen ranked as worst electricity supply nation in 2017, followed by Nigeria, Haiti, Lebanon, and Malawi.
Ethiopia occupied the 37 position, while South Africa and Algeria occupied the 41, 45 positions, respectively.
We, therefore, call on all critical stakeholders in Nigeria’s electricity value chain including Nigeria Bulk Electricity Trading Company (NBET), DisCos, Generation Companies (GenCos) and the Transmission Company of Nigeria (TCN) to close ranks with a view to resolving the nation’s seemingly intractable electricity crisis.