January 14, (THEWILL) – In a strange twist of events, the Federal Government has transferred its shares in the 11 electricity distribution companies (DisCos) from the Bureau of Public Enterprise (BPE) to the Ministry of Finance Incorporated (MOFI).
This is coming after the Nigerian Electricity Regulatory Commission (NERC) had on January 8, 2024, announced plans to commence the sale of some of the government’s assets under the holding of the BPE, including the Kaduna DisCo.
In a communication signed by its CEO, Dr Armstrong Takang, and made available to THEWILL, MOFI notified the electricity successor companies (the DisCos) of the government’s decision to transfer its shares from BPE to MOFI.
The development followed the Nigerian Electricity Supply Industry (NESI) Bill signed into law by President Bola Tinubu in June, 2023, which authorises states, companies and individuals to generate, transmit and distribute electricity.
The new electricity law repeals the Electric Power Sector Reform Act (EPSRA) which was signed by President Olusegun Obasanjo in 2005 and it provided the legal, regulatory and governance frameworks underpinning the Nigerian Electricity Supply Industry (NESI).
The new Act signed by Mr Tinubu consolidates all legislations dealing with the electricity supply industry to provide an omnibus and ideal institutional framework to guide the post-privatisation phase of NESI and encourage private sector investments in the industry.
“I now write to formally advise you that the Minister of Finance, recognising the repeal of the EPSRA, the long-standing competition of the privatization and the restructuring of MOFI, has by Order, formally terminated the Power of Attorney and directed the restoration of the FGN’s equity interests in all electricity successor companies to be held and treated by MOFI,” the communication stated.
According to the accompanying document directing the transfer of the shares also seen by THEWILL, Wale Edun, minister of finance and coordinating minister of the economy, in the Order, dated January 10, directed the board of directors of the MOFI to assume ownership, control, and management of all equity holding of the Federal Government of Nigeria in the 11 DisCos.
Edun also directed MoFI to “Assume ownership, control, and management of all equity holdings of the Federal Government. of Nigeria, as contemplated and provided for by law and/or any contract; and issue all appropriate notices, instruments, and documents which are required to give effect to this directive”.
Before this Order, under the statutory mandate in Section 9 of the now-repealed Electric Power Sector Reform Act, 2005, the BPE was the holder of record of the equity interests of the FG in DisCos.
The BPE had also nominated various persons to be directors in DisCos and managed the implementation of the various rights and obligations of the FGN in the company
“The BPE nominee director on the board of directors of this Company is withdrawn with immediate effect and share certificates of the Company issued in the name of the BPE are to be immediately withdrawn and cancelled,” said Takang,
He said that new share certificate for all outstanding shares of the FGN in the companies is to be issued in the name of “MINISTRY OF FINANCE INCORPORATED”.
“All minutes of Board meetings, current management operational reports, extant strategic business and operating plans, management accounts and audited financial statements going back to the 2021, 2022 and 2023 financial years should be immediately delivered to MOFI”.
THEWILL recalls that BPE had last December disclosed plans to sell off the remaining 40 percent shares of the federal government in the DisCos and four other assets in 2024.
Other assets that will be sold off via public offerings at the capital market include Eleme Petrochemicals Company Limited, Nigeria Reinsurance, NICON Insurance, and the Nigeria Machine Tools in Osogbo, according to BPE.
The Nigerian Electricity Regulatory Commission (NERC) had on January 8 put up for sale the Kaduna DisCo, sixth largest power distribution utility over a $130 million debt, less than two years after the lenders who took over the company failed to turn it around and make it profitable.
The power distribution company owes N110 billion ($130 million), NERC said in a notice on Monday, January 8, to companies including the Nigerian Bulk Electricity Trader and power generation firms.
The regulator said it now considered the company a ‘failing licensee’, allowing NERC to dissolve its board using a law passed last year.
Analysts express mixed feelings over the development as the government had indicated the determination to hands off the moribund public assets and sell its shares in investments that constitute a drain of resources.
Now that the federal government is transferring its shares in the DisCos from BPE to MOFI, with accumulated huge debts, it becomes unclear how this will change the unending power challenges that have crippled the economy.
