Power generation drops, Discos, FG battle for control

 Dropping power generation, discos and FG fighting for control

An intense conflict has developed between the Discos and the government as a result of Fidelity Bank's planned acquisition of three power distribution businesses and the Federal Government's restructuring of two further companies.

Through the Bureau for Public Enterprise, the Federal Government is supporting Fidelity Bank's acquisition of the three Discos.

Findings reveal that Discos have continued to file new lawsuits in an effort to avoid being taken over by the government and the bank.

Power sector specialists have praised and criticized both parties in response to the development, which has divided industry players.

It was noted on Monday that electricity generation on the national grid fell by around 141.3 megawatts as compared to what was recorded on the system on July 9, 2022, despite the fact that industry stakeholders expressed a variety of opinions on the trend.

According to data our reporter got from the Federal Ministry of Power, power generation peaked on July 9, 2022, at 3,992.6 MW, but on July 10, 2022, it plummeted to 3,908.8 MW.

Power generation on the grid as of 6 am on July 11, 2022, was 3,851.31MW, suggesting a loss of 141.3MW when compared to figures reported on July 9, 2022, according to data from the FMP, which further decreased this on Monday.

Industry experts have expressed a range of concerns over the Federal Government's recently announced plans to acquire and restructure a number of power distribution companies.

The Federal Government said last Tuesday that Fidelity Bank Plc has started the process of assuming control of the boards of the three energy distribution companies (Discos) in Kano, Benin, and Kaduna.

The Asset Management Corporation of Nigeria acquired Ibadan Disco, and it was also disclosed through the Bureau of Public Enterprises that the BPE had received authorization from NERC to name an interim managing director for the struggling power company.

In addition, the government had indicated in the restructuring notice from last Tuesday that it was reorganizing the board and management of Port Harcourt Disco in order to prevent the utility's impending insolvency. The warning was signed by Sanusi Garba, executive chairman of NERC, and Alex Okoh, director-general of BPE.

The receiver/manager of Integrated Energy Distribution and Marketing Company, however, had argued on Wednesday in response to the announcement that it was the legally and beneficially-owned shareholder with a 60% (controlling and managing) shareholding interest in the Ibadan Electricity Distribution Company.

Additionally, following the alleged activation of the call on its collateralized shares by Fidelity Bank on Wednesday, the management of the Benin Electricity Distribution Company Plc stated that there was no legal justification for the takeover of the company.

A member of the National Technical Investigative Panel on Power System Collapses (June 2013) and President of the Nigeria Consumer Protection Network, Kunle Olubiyo, commented on the development on Monday and told our correspondent that the government's action should be applauded.

He noted that the mid-term assessment should have happened five years into the post-privatization process, meaning that the licensees typically had a 10-year tenure.

"This was not carried out uniformly," Olubiyo said.

He said, "The so-called (Discos) failed in all benchmarked global best practices and Key performance indicators, including the open book review, service level agreement, mass metering, investment in network upgrade and overhaul, and governance structure."

"As for short-, medium-, and long-term investments, what we observed was rent-seeking, profiteering, and a lack of budgetary responsibility and the required discipline."

Olubiyo observed that no industry could endure in an environment where there were no penalties for crime and no repercussions for violations.

The NCPN president said, "Under the current conditions, we are on the same page with key stakeholders in the current efforts to clean up the mess and release our economy grabbed by its jugular by the non-performing utilities.

Another expert in the power industry, Prof. Yemi Oke, said in his submission on the subject that the Power Holding Company of Nigeria, which is no longer in operation, produced around 3,800 megawatts of electricity in 2009.

Today's generation is 2,400MW, he said, "despite all the talk of privatization."

Oke said, "In 2009, the sector was managed by just one MD/CEO (managing director/chief executive officer) for NEPA (National Electric Power Authority)/PHCN.

"Today and after privatization, there are over 25 MDs/CEOs enriching themselves off the meager output of 2,400MW. They're also crying over the lack of money.

"How are they going to pay for this inefficiency? Depending on 2,400MW, there are 25 MDs/CEOs, over 100 executive directors, etc. Jobs for the "boys" are the issue! As far as the energy industry (petroleum, gas, and power) is concerned, we are in a severe crisis.

According to the professor, the enormous weight of funding and lending for power industry acquisitions may cause at least five Nigerian banks to fail.

Three banks have already closed, he claimed, and one had "just revealed itself by this move," he added.

"80% of the Discos are technically insolvent, thus the issues in the power sector may persist," Oke continued. An average of five to six national grid/system breakdowns will continue to occur annually.