Electricity distributors slam FG over N100bn unpaid subsidies

By Abimbola Abatta

The Federal Government has been slammed following its failure to pay the 11 Distribution Companies (DisCos) N100 billion subsidy on electricity.

The Association of Nigerian Electricity Distributors (ANED) made this known in a statement by its Executive Director, Research and Advocacy, Barrister Sunday Oduntan, at the weekend.

ANED expressed concern about the plan by the Bureau of Public Enterprises (BPE), in collaboration with the Nigerian Electricity Regulatory Commission (NERC) to restructure five electricity DisCos after their management were sacked and replaced with government appointed officials.

Nigerian NewsDirect reports that the companies were privatised and handed over to the private sector in November, 2013 but banks took over the assets after the owners failed to meet up with loan repayments for the acquisitions.

According to Oduntan, the restructuring of the companies’ management were inconsistent with all the guidelines and processes necessary to comply with the framework of privatisation agreements and the rule of law.

He added, “We believe that it is reasonable to conclude that the resultant outcome has been an expropriation or backdoor renationalisation of the DisCos by the Federal Government of Nigeria.

“Such renationalisation or expropriation must be viewed through a historical context as necessary for a proper understanding of the performance challenges that the DisCos have been faced with since privatisation.

“Fundamentally, the basis of privatisation was flawed from the beginning, due to conditions that were not met by the FGN, while expecting the DisCos to meet their performance obligations. Not only were the investors short-changed because of insoucient and unreliable data that was provided by BPE to them during the privatisation process, but the government also committed to and failed to deliver on the following.

“Debt-free financial books; Payment of Ministries, Department and Agencies electricity debts; N100 billion subsidy; Implementation of a cost reflective electricity tariû (this singular unfulfilled condition has led to accrued significant debt and liabilities on the DisCos’ financial books, as they continued to sell electricity below the cost price); and private management of the Transmission Company of Nigeria, currently, a government-owned and operated entity (a major requirement for attracting the private investment that is critical to addressing the transmission bottleneck that is currently belittling the Nigerian Electricity Supply Industry value chain.”

Oduntan said the Federal Government failed to meet its commitments over the post-privatisation period and “have belatedly been partially addressed – too late to rectify current performance challenges”.

He stated that “While the DisCos are not exonerated from responsibility for performance failures, it would be unrealistic to reach related conclusions without taking into consideration the factors that have been listed previously, as well as the FGN’s contributions to these challenges.

“Furthermore, there is an established process by which a change of a corporate entity’s Board of Directors and management occurs. As such, it is with much surprise that the DisCo investors awoke to the July 5th, 2022, renationalisation or expropriation of the five DisCos.

“More so, given that due process was not followed and that the FGN, as a 40 percent minority shareholder, is represented by the Director General of BPE on the Board of each of the DisCos and is party to all decisions concerning the operations of the DisCos.”

Meanwhile, at the time of filing this report, efforts to get reactions from Transmission Company of Nigeria (TCN) proved abortive as the spokesperson could not be reached.