Experts praise FG’s transfer of over 40% shareholding to MOFI
The Federal Government has received praise from power experts for transferring its 40 percent shareholding in electricity distribution companies. The experts expressed their commendations in separate interviews with journalists in Lagos on Monday.
The transfer, which took place on January 12, saw the government move its shareholding from the Bureau of Public Enterprises (BPE) to the Ministry of Finance Incorporated (MOFI). Dr. Ayodele Oni, a Partner at Bloomfield Law Practice, described the move as a significant step towards promoting more robust boardroom discussions.
Oni expressed that the shift demonstrated the government’s commitment to enhancing the competitiveness of government-owned companies and assets.
He stressed that the redirection of shares was not a miraculous solution, but rather a practical move based on a strategic vision.
With the Ministry of Finance’s board duly constituted and operating as a business entity, Oni signified that they would be witnessing more direct investments in the Discos in 2024 and beyond.
“MOFI was set up pursuant to Sections 2 and 3 of the MOFI Act 1959, as an assets holding company vested with the responsibility of being the sole manager of all federal government investments, interests, estates, easement and rights.
“The BPE was, however, set up for the purpose of privatising public enterprises, carrying out sector reforms and liberalisation of key economic sectors.
“It was, thus, an anomaly to have BPE continue to hold, on behalf of the federal government of Nigeria, those shares of the electricity distribution companies as MOFI was set up, to do just that.
“The step, now being taken by the government, in my view, is indicative of the government’s seriousness to improve the quality of the government’s investments in the Discos.
“This is so, because, whilst the BPE does not have the powers to make investments, as its primary purpose is the privatisation of entities, MOFI on the other hand has far-reaching powers to make investments.
“Not only does the MOFI have such powers, it does have a decent asset base from which to deploy resources to possibly support and or rescue the Discos from their financial doldrum,” he said.
Oni said with the current business targets of MOFI, deliberate steps would be taken to generate revenue for the government, improve foreign direct investments and ensure the financial protection of all investments in its custody.
On his part, Chairman of the Customer Consultative Forum of Festac/Satellite Town, Lagos State, Dr Akinrolabu Olukayode acknowledged that opinions on the transfer of shareholding might vary.
Olukayode said some might perceive it as a positive step towards increasing transparency and accountability, as the Ministry of Finance gains more oversight and control over the electricity distribution companies.
He said that others might be concerned about potential politicisation of the sector, as the ministry was a political entity.
The expert said, “The impact on the economy, Nigerians, and investment will depend on how the Ministry of Finance manages its new role.
“If it leads to improved governance, efficiency, and investment in the electricity distribution sector, it could have positive effects on the economy and Nigerians by ensuring reliable power supply.
“On the other hand, if mismanagement or political interference occurs, it can hinder investment and negatively impact the economy and Nigerians who rely on electricity services,” he said.
The EKEDC customers forum chairman said that the transfer of shareholding might not directly enhance the regulatory authority of the Nigerian Electricity Regulatory Commission (NERC) or government appointments into the boards of Discos.
He, however, ssid that it could potentially lead to changes in the regulatory framework or decision-making processes if the Ministry of Finance decided to exercise its new authority in this area.
Also, Mr Chinedu Amah, another power expert, said the government just moved the portfolio between two govt offices.
Amah said If the government wishes to trade its shares, it should do so already, adding that he doesn’t see how this would improve supply significantly.
He said, “If the challenges of the sector include funding then trading the equity with a view to attract investment would be key.
“Unfortunately, trading the government equity will not have any direct funds injection into the disco. So, I do not see any direct correlation connecting this action to any form of progress.
“The present DisCos holders should have a right of first refusal. Government should open up the market by enabling cost reflective tariff and also enforce value added franchising to increase supply capacity
“The same Finance Ministry that is not clearing Ministries, Departments and Agencies (MDAs) debts.”
