Highlight

Power outages: FG set to unbundle 11 Discos, each state to get its own firm

"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 ...each state government will know the responsible Disco for their states"

326

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has been directed to sanction underperforming Discos, adding that the licenses of some of the Discos might be withdrawn for non-performance.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.

 

Leave a comment

Related Articles

Tinubu’s commitment to 30% inclusiveness quota for youths demonstrates his love for them. – Olawande

The Minister of State for Youth Development, Mr. Ayodele Olawande, has stated...

Oil sector attracted $16.6bln investments under Tinubu administration – Lokpobiri

The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has announced...

History made as ECOWAS Parliament elects first female speaker

Daniel Okejeme The Economic Community of West African States (ECOWAS) Parliament has,...

Just in: Reps pass bill to revert to old national anthem, scales second reading in Senate

The House of Representatives has passed a bill for the country to...

Decade after, two abducted Chibok girls excited as they graduate from US varsities

by Daniel Ojekeme More than a decade after their freedom from the...

Assault on nurse: Police arraign Oriokpa masquerader

Daniel Okejeme The Enugu State Police Command says it has apprehended and...

Breaking: New law reinstates Sanusi as Emir of Kano, dethrones Bayero, four other emirs

The Kano State Emirate Council Law (Amendment Bill) 2024, passed by the...

Just in: Abuja metro rail to operate free for two months, says Wike

Mr. Nyesom Wike, the Minister of the Federal Capital Territory, has disclosed...

Breaking: Sirika, brother, pleads not guilty to alleged N19.4bln fraud

Former Minister of Aviation Hadi Sirika, his brother, Ahmad Sirika, and a...

Gowon drums support for Tinubu, seeks political structure that fits present realities

By Daniel Okejeme A former Head of State, Gen. Yakubu Gowon, has...

Tinubu off to Chad for Pres. Déby’s inauguration

President Bola Tinubu will leave Abuja on Thursday morning for N’Djamena, the...

Just in: Court grants DCP Abba Kyari two-week bail for mother’s burial

DCP Abba Kyari, a former commander of the Force Intelligence Response Team...

Emir of Kano in Ijebu Ode, felicitates Awujale on 90th birthday

The Emir of Kano, Alhaji Ahmad Ado Bayero, paid homage to the...

Federal appointments: Woke reassigned as OORBDA’s MD to NOSDRA as DG

Daniel Okejeme Barely two weeks after his appointment, President Bola Tinubu has...

May 29: Tinubu orders low-key celebration of first anniversary

President Bola Tinubu’s first anniversary in office on May 29 will be...

Tax Evasion: Absence of Binance official, Gambaryan, in court stalls arraignment

Daniel Okejeme The absence of Binance official Tigran Gambaryan in court on...

I started administering Rivers State eight months after assuming office, says Gov. Fubara

by Daniel Okejeme Rivers Gov. Siminalayi Fubara has said that he started governing...

Plateau, Benue killings, one death too many, says Obi

Daniel Okejeme A former governor of Anambra State, Mr. Peter Obi, says...

Chad PM Submits Resignation To Newly Elected Junta Chief

Two weeks after his defeat to junta chief Mahamat Deby in the...

Banex Plaza attack: A threat to national security – Nigerian Army

Daniel Okejeme The Nigerian Army’s spokesperson, Maj.-Gen. Onyema Nwachukwu has described the...