The Federal Government says it has begun the restructuring and unbundling of the 11 electricity distribution companies (Discos).
According to the Minister of Power, Dr. Adebayo Adelabu, the Discos are being broken up into manageable areas of coverage – a disco per state – for greater efficiency, reports Persecondnews.
“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 percent in the firms,” he said while receiving the Senate Committee on Power, led by their Chairman, Senator Eyinnaya Abaribe, in his office.
Adelabu added: “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.
“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.”
The power minister disclosed that the Oyo State Government had already written to the Federal Government that it wants to exercise its rights in the Ibadan Electricity Distribution Company (IBEDC).
He said the Nigerian Electricity Regulatory Commission has been directed to sanction underperforming Discos, adding that the licenses of some of the Discos might be withdrawn for non-performance.
“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 has to withdraw licenses for non-performance, why not? If it has to change the boards and management, 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,” Adelabu also said, adding that those who acquired the Discos when they were privatized, lacked the required expertise and financial capacity.
He said: “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.”
The minister said the investors had promised to reduce the losses in the Discos, but stressed that up till now the losses had remained at about 40 percent across the power value chain.
“So the Discos are not investing as expected,” Adelabu stated.
He also disclosed that more than 100 projects of the Transmission Company of Nigeria (TCN) have not been completed since 2001, about 23 years ago.
“Since 2001 till date we have over 100 uncompleted projects of the Transmission Company of Nigeria. So when we say the government has spent so much in the sector, it is true. But all the spending have not translated to a good impact on power users.
“This is because majority of these projects have not been completed, though some of them are 80 or 90 percent completed. We have over 65 projects on power substations that are still ongoing since 2001, which is 23 years ago.
“We have about 62 lines projects across the country that were started and have not been completed. And these are being affected by exchange rate calculations, inflation, variations, etc. One thing about power projects is that if they are not completed 100 percent, you cannot energize them.”
“All the investments are just there lying in waste, but we are saying that this year we must ensure that a significant number of these projects are completed so that Nigerians can enjoy the investments in the transmission company.”
The minister also said the target of the Federal Government is to achieve 6,000MW of power before the end of this year, adding that this has been submitted to President Bola Tinubu.
He called for the payment of the outstanding debts to gas companies and power generation firms.
He said the government is currently talking with two investors that should invest in the construction of 3,000MW of solar-power projects in various states to support the national grid.
The minister pointed out that Nigeria currently has an installed power generation capacity of about 14,000 megawatts.
“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.”
Adelabu said the 5,800MW was generated in March 2021, which was over three years ago.
“But we believe that with good investments and demand for power, we can increase power generation to over 8,000MW once there is adequate infrastructure.”
A member of the Senate Committee, Senator Danjuma Goje 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 Senate Committee also authorized an investigative hearing on the electricity tariff hike and stated that this would be held on April 29, 2024, at the Senate.
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