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HomeTop NewsNigeria to sell three poor performing DisCo to new investors

Nigeria to sell three poor performing DisCo to new investors

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By Samuel Bankole

Nigeria plans to sell three power distribution companies (DisCo) recently taken over by a commercial lender due to indebtedness to new investors, according to the country’s privatisation agency.

Fidelity Bank Plc on Tuesday had informed the power sector regulator and the bureau that “a call on the collateralized shares of the Core Investors of Kano, Benin and Kaduna DISCOs had been activated” leading to the take over of the management of the distributions firm by the lender.

A statement by the Bureau of Public Enterprises (BPE) stated that The Lenders’ consortium includes AFREXIM Bank, Keystone Bank, Stanbic IBTC, as well as Fidelity Bank.

According to the BPE, the action of the lenders is a contractual and commercial intervention and is between the Core Investors in these DISCOs and the lenders.

It also declared that Benin, Kaduna and Kano electricity distribution companies were the worst-performing Discos among the 11 power distributors in Nigeria.

It stated that based on this, the government through the BPE and the Nigerian Electricity Regulatory Commission (NERC) had resolved to sell the majority interest in the three Discos to competent investors.

“As the agency, representing the interest of the Federal Government in the DISCOs, BPE has already engaged with the Central Bank of Nigeria (as the banking sector regulator) for an orderly transition and to ensure that the lenders do not hold the collateralized shares of the Core Investors in perpetuity given that they do not have the technical capacity, nor have they been duly authorised to operate an electricity distribution companies.

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“The lenders have also assured BPE and NERC that they would participate fully in all the ongoing market initiatives aimed at improving the sector (e.g. National Mass Metering Program).

“It is envisaged that the majority interest in these DISCOs would be sold to competent private sector investors with the requisite technical and financial capacity to re-capitalize and manage these entities efficiently,” the BPE said in the statement signed by its Director-General, Alex Okoh.

The BPE also named Ibadan Disco as the worst performing electricity distribution firm in terms of the Performance Assessment review conducted in December 2021.

“Ibadan DISCO has actually retrogressed in terms of their critical performance parameters as contracted in the Performance Agreement signed with the Bureau.

“In fact, the DISCO under the management of the Core Investor, Integrated Energy Distribution and Marketing Limited (IEDM), has performed worse than before it was privatized.

“The performance of Benin, Port Harcourt, Kano and Kaduna DISCOs have also been abysmal.

“It is necessary to state categorically that the poor performance of these DISCOs represents a clear and present threat to the power sector as a whole and no responsible government and shareholder, would stand idly by and allow this situation to persist,” the BPE stated.

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