FG may force Discos owners to divest stake on poor performance

The federal government may have to ask the Distribution Companies (Discos) to give up some of their holding in the privatized power entities and allow serious investors to run them efficiently and deliver more gains to the economy.

This is one of the options on the table to get the power distribution network deliver on privatization goals, Alex Okoh, Director General, Bureau of Public Enterprises said on Monday- even though that option is not formally discussed yet.

“We have not discussed that option formally but we are not taking any option off the table,” Okoh responded Monday to a question posed by BusinessDay on the sidelines of an investors forum organized by the BPE.

“If the Discos currently because of the way that their balance sheet has been compromised are not able to raise sufficient investment capital to improve the distribution network, the provision of meters, and all that, then we have to look at the possibility of how to admit other investors who may have the capacity financially and in terms of the technical expertise to improve the distribution infrastructure,” he added.

Okoh said government was tired of the situation where the “general populace is receiving the wrong end of the stick all the time,” stressing that what  the public wants is improved power supply and power delivered at a reasonable cost.”

He said in meeting the expectation of the public, “government is not taking any options off the table, including admitting new investors who have the capacity to deliver,” Okoh stressed.

This comes at the federal government opens talks with core investors of those privatized entities which are currently either comatose or underperforming. This is to marshall out strategies of revamping them to contribute more to the economy .

Okoh also confirmed that the BPE and other agencies that are involved in supervising the power sector are discussing to ensure that they are able to build a bridge that allows, first efficient service delivery and second,  cost recovery for the investors in the sector.

He said there is a proposal to set up a coordinating body for all of those agencies responsible for power sector reform – the body should in constant dialogue with the key private sector players in the power sector, according to the DG.

“Privatisation of the power sector isn’t going  right way and hasn’t achieved its full objective, I will be the first to admit,” Okoh said blaming  industry issues, some of which are related to power pricing, efficiencies of the current operators of the discos in terms of how they enumerate and meter their customer base.

He also listed infrastructural issues, in terms of the distribution infrastructure- upgrade and expansion.

He admitted that electricity tariff at the moment are not at the level it should be to cover for the service delivery, but that the issue is the appropriate pricing which has not been properly worked out if the efficiency that the discos should have brought into the system is factored in.

“So until we are able to pull all of these various aspects that contribute to the efficiency of the power sector especially at the distribution end of the chain, it will be very difficult to determine what the appropriate pricing or tariff should be,” he however stressed.

He said government is further worried that 37 percent of the privatized entities has been identified as not performing of performing sub-optimally, especially those in which the government does not  own a stake.

The investors forum was therefore to create a platform where the public and private sector stakeholders are able to engage meaningfully and attract potential investors that would be able to inject a new lease of life into these key sub-sectors of the nation’s economy.

The forum also aimed at further opening the enterprises for potential investors to inject fresh ideas, capital and expertise into rejuvenating these enterprises.

The Enterprise Stakeholders’/Investors’ Forum was organized for some selected enterprises which covers the following sectors of the Nigerian economy, including the Bricks and Mining, Steel and Automobile, as well as Industry, Services and Agriculture.

“Responsibility and intergrity demands that we bring these core investors and the businessses into an arrangement that helps government dimension what the issues are, whether taxes, tariffs, foreign exchange, access to capital at a decent interest rate, structural issues around roads, so we want to have a multi sectoral approach.

“We brought all the MDAs that are responsible for various aspects of the policy that may be affecting that non-performance of those enterprises, work out a solution framework that would bring those industries on track.

According to him, “It is counter intuitive and productive if you privatize a motor vehicle assembly plant and then lower tariff on importation of vehicles and you can’t also make credit unaffordable and inaccessible to these businesses, it doesn’t provide the enabling environment for these industries to thrive.

He said, however, that the BPE has been able to diagnose the problems these enterprises and would present a report soon.

“If they make the strategic decisions to bring additional investors, bring in Capital., that would be fine,,” Okoh explained.