The Federal Government has revealed plan to restructure the management and Board of five electricity distribution companies (DisCos) following the Fidelity Bank’s activation of call on the collateralized shares of Kano Electricity Distribution Company (KEDCO) Benin Electricity Distribution Company(BDEC), and Kaduna Electric over their inability to offset loans obtained to pay for assets they acquired in the 2013 privatisation exercise.
Sanusi Garba, Executive Chairman of the Nigerian Electricity Regulatory Commission (NERC), and Alex Okoh, Director-General of the Bureau of Public Enterprises (BPE) made this known in a statement that they jointly signed and obtained by EnergyDay onTuesday.
The statement confirmed the FG’s decision to restructure the management of the five electricity distribution companies, including BDEC, KEDCO , Kaduna Electricity, Ibadan Electricity Distribution Company (IBEDC) and Port Harcourt Electricity Distribution Company (PHED).
The two Federal Government agencies noted that the Asset Management Corporation of Nigeria (AMCON) would be a placeholder board for IBEDC in a temporary capacity while the PHED undergoes restructuring to prevent its imminent insolvency.
According to the statement, prior to this time, the new Boards for the affected DisCos had been approved and the bureau was collaborating with the Central Bank of Nigeria (CBN) and the Ministry of Power to ensure no service disruptions during the transition.
In the statement with the theme: RESTRUCTURING OF KANO, BENIN, KADUNA, IBADAN, AND PORT HARCOURT DISCOs
NERC and BPE said, ” We were informed by Fidelity Bank that they have activated the call on the collateralized shares of Kano, Benin, and Kaduna (Fidelity and AFREXIM) DISCOs and that they have initiated action to take over the Boards of these DISCOs and exercise the rights on the shares.
“Fidelity Bank’s action is a contractual and commercial intervention and is between the Core Investors in the DISCOs and the lender. BPE is involved because of the 40% shareholding of Government in the DISCOs.
“Fidelity Bank has informed us that the new Board members of the affected DISCOs will be as follows: Kano DISCO: Hasan Tukur (Chairman), Nelson Ahaneku (Member), Engr. Rabiu Suleiman (Member)
– Benin DISCO: KC Akuma (Chairman), Adeola Ijose (Member), Charles Onwera (Member)
– Kaduna DISCO: Abbas Jega (Chairman), Ameenu Abubakar (Member), Marlene Ngoyi (Member)
“BPE has nominated Bashir Gwandu (Kano), Yomi Adeyemi (Benin), and Umar Abdullahi (Kaduna) as independent Directors to represent Government’s 40% interest in the three DISCOs respectively, during this transition.
“We are engaging with the Central Bank of Nigeria (as the banking sector regulator) to ensure an orderly transition and to ensure that Fidelity Bank does not hold the DISCOs’ shares in perpetuity.
“It is envisaged that the majority interest in the entities would be sold to capable private sector investors willing and able to re-capitalize and manage the entities efficiently.
“We have also received assurances that Fidelity Bank will participate fully in all the ongoing market initiatives aimed at improving the sector (e.g. National Mass Metering Program).
“In the interim, NERC and BPE met on an Emergency Basis and activated the Business Continuity Process and have appointed interim Managing Directors in the affected DISCOs.
Kano Disco – Ahmad Dangana
Benin Disco – Henry Ajagbawa
iii. Kaduna Disco– Yusuf Usman Yahaya
“Also, with the takeover of Ibadan DISCO by AMCON, the BPE has obtained approval from NERC to appoint Kingsley Achife as the interim Managing Director.
“In a temporary capacity the leadership of AMCON will be a placeholder Board for the Ibadan franchise (Ahmed Kuru – Chair, Eberechukwu Uneze – Member, Aminu Ismail – Member). Oluwaseyi Akinwale will represent the interest of Government on the Board alongside the DG of BPE.
“Lastly, we are re-structuring the Management and Board of Port Harcourt DISCO to forestall the imminent insolvency of the entity.
“As a condition for support to the entity to meet its market obligations, Iboroma Akpana will take over as the Chairman of the Board. Emmanuel Okotete, Eyo Ekpo, Ismaila Shuaibu and the DG of BPE will form the interim Board. Mr. Benson Uwheru will take over as the Managing Director of PHEDC as part of the changes.
“Government will support the activation of Emergency funds through the Nigerian Electricity Market Stabilization Facility to support the entity while it goes through restructuring and repositioning to serve the citizens of the franchise area better.
“We are working with the Honourable Minister of Power to ensure no service disruptions during these transitions. We remain committed to supporting the Nigerian Electricity Supply Industry to serve Nigerians better,” NERC and BPE stated in a joint statement.
Recall that UBA Plc, Fidelity Bank , AFREXIM Bank and other financial institutions provided loan facilities for the eleven(11) DisCos for the acquisition of about 60 percent shares in power utility firms during the 2013 privatisation exercise.
Over the years the Banks have been making efforts to take over the DisCos for their inability to service the loan facilities, together with the interest which have ballooned to around N860 Billion( 400% the actual money received from banks).
The Federal High Court had on September 8, 2021, granted orders in favour of AMCON to take over as the management of IBEDC from the Receiver/Manager of Integrated Energy Distribution and Marketing Limited, IBEDC’s core investor, over default in Loan Service Agreement.
Few months later, in November 2021, the United Bank for Africa (UBA), forcefully took over the management of Abuja Electricity Distribution Company Plc from its core investors KANN Consortium, for its inability to service loan plus interest which ballooned to over 100 Billion.
EnergyDay gathered that the DisCo was “terminally ill” and was unable to effectively service the loans it obtained from UBA.