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Tag: BPE

  • BPE: why Fed Govt is holding on to 40% stake in DisCos

    •Bureau explains revival mission

    The Bureau of Public Enterprises (BPE) is determined to revive some of the 147 privatised Federal Government enterprises, 37 per cent of which were said to be under-performing. The revival is for revenue generation and employment purposes. JOHN OFIKHENUA reports that the BPE is justifying government’s refusal to divest its 40 per cent stake in the electricity Distribution Companies (DisCos) to shore up revenue and create more jobs.

    The 11 Distribution companies supplying electricity to domestic and industrial consumers and their operational areas are presented below:

    • Kaduna Distribution Company – Kaduna, Zamfara, Sokoto and Kebbi

     

    • Kano Distribution Company – Jigawa, Kano and Katsina

     

    • Abuja Distribution Company – Niger, FCT, Nassarawa, and Kogi

     

    • Ibadan Distribution Company – Kwara, Oyo, Osun and Ogun

     

    • Eko Distribution Company -Lagos, Ogun and Agbara

     

    • Ikeja Distribution Company – Ikeja, Oshodi, Epe, Ikorodu, Kosofe, Ikosi-Isheri, Alimosho, Agege, part of Amuwo-Odofin, part of Mushin, Ojodu Berger and part of Ogun

     

    • Benin Distribution Company – Delta, Edo, Ondo and Ekiti states

     

    • Port Harcourt Distribution Company – Cross River, Akwa Ibom, Rivers and Bayelsa states Enugu Distribution Company Abia, Ebonyi, Enugu, Anambra and Imo states

     

    • Yola Distribution Company – Taraba, Adamawa, Borno and Yobe states

     

    • Jos Distribution Company – Benue, Gombe, Bauchi, and Plateau.

     

    THE Bureau of Public Enterprises (BPE) is set to revive non-performing privatised enterprises in its determination to create more jobs and widen the Federal Government tax sources.

    It (BPE) is optimistic that the full implementation of its Post Acquisition Plan (PAP) for the enterprises will be beneficial to communities, where such concerns are domiciled

    A stakeholders’/investors’ forum was recently organised in Abuja by the BPE to revitalise the bricks and mining, steel, automobile industry, services and agriculture sectors.

    At the opening of the forum, Vice President Yemi Osinbajo, who doubles as the Chairman of the National Council on Privatisation (NCP) Chairman, said the Federal Government has refurbished 140 public enterprises the Bureau’s 30 years of reform journey.

    He listed the affected enterprises across the various sectors of the economy as including: banking and insurance, oil and gas, power, hospitality, pensions and telecommunications.

    The reforms, according to the BPE chair, were in the form of full or partial privatisation, full or partial commercialisation and concession.

    Prof Osinbajo said: “The vast majority of these enterprises can be regarded as being productive and profitable. However, naturally, there is a small percentage of these enterprises which have not been able, for one reason or the other, to achieve success. The purpose of this forum is to address this.”

    BPE Director-General Alex Okoh explained that since the beginning of the privatisation programme in the 1980s, the Bureau has successfully privatised 142 enterprises by December, last year.

    Out of the 142, according to him, 94 enterprises have been successfully monitored. They cover critical sectors of the economy from the transportation to vehicle assembly plants, oil palm, cement, hospitality, fertiliser, bricks and clay, mines and steel, national facilities, oil and gas, ports, power and communication.

    Sixty-three per cent of the privatised enterprises are performing. Thirty-seven are not performing as expected that,” the BPE boss noted.

    He said that the BPE meeting with core investors in the six bricks and clay companies, mining firm, three automobile firms, two oil palm industries and two paper manufacturers between May and June was to achieve the objective.

    Besides, Okoh, who expressed satisfaction with the process, said the numerous engagements with the investors were to secure their full buy-in and support for the forum.

    He said: “I am happy to announce that all the 12 core investors we have selected for this pilot scheme have cooperated with the Bureau in the organisation of the forum, and they submitted their inputs and recommendations of what needs to be done to revive the enterprises and attract potential investors.  This would form part of the discussion that we will be holding today.”

    It was to further consolidate on the gains the Federal Government insisted on collaboration with stakeholders to activate moribund companies for full capacity utilisation and for the benefit of the citizenry.

    Okoh, therefore, told the stakeholders that the essence of the forum was to create a platform for the public and private sector operators to engage meaningfully and attract potential investors that would inject a new lease of life into the key sub-sectors of the economy.

    The BPE director-general also explained that the forum was to open the enterprises for potential investors to inject fresh ideas, capital and expertise into rejuvenating them.

    The urgent need for the enterprises’ revival according to the vice president, culminated in a directive to the National Council on Privatisation (NCP) to the BPE to, amongst other things, highlight the significant potential of these enterprises, interact with potential investors, engage the key stakeholders (including the relevant MDAs) and facilitate the resolution of all identified impediments that have prevented these companies from performing optimally.

    Osinbajo said: “Today’s forum represents a continuation of the Federal Government’s desire and commitment to put in place an enabling business environment and to create investment opportunities for the private sector.

    “Please recall that we signed three Executive Orders last year to actualise this desire and to address the following critical areas namely:

    • The promotion of transparency and efficiency in the business environment designed to facilitate the ease of doing business in the country;
    • Support for local content in public procurement by the Federal Government;
    • Timely submission of annual budgetary estimates by all statutory and non-statutory agencies, including companies owned by the Federal Government.

    “The impact of these Executive Orders is already being felt and resulted in Nigeria rising 24 places in the World Bank’s Ease of Doing Business rankings for 2017.

    “It is my anticipation that by bringing together policymakers, local and foreign investors, we will be able to engage in meaningful dialogue and develop a road map for reviving these enterprises and other non-performing enterprises.”

    Okoh listed the objectives of the privatisation programme expected to be achieved at the forum as:

    • To build a strong and competitive economy.
    • To re-focus the role of government in the economy.
    • To attract foreign investment and technology; to create higher skilled/paying jobs.
    • To bring the benefits of privatisation to the common man.

     

    Government defends

    stake in DisCos

     

    After the privatisation of the Power Holding Company of Nigeria (PHCN) Plc assets in 2013, the Federal Government retained 40 per cent equity in the DisCos. Despite having the BPE to represent government’s interest in the companies, their performance remained below average.

    Confronted with questions about the companies at the sideline of the forum, Okoh explained why government has not divested its stake in the firms despite the dire need of funds for revival.

    His words: “Power is a strategic utility and the government at this time is not comfortable to totally divesting the interest in such essential and core utility. We had proposed that over time as we see the performance of the new private sector investors holding 60 per cent in the Discos and their commitment to providing this key public utility, then the government can systematically divest its interest.

    “But, we have to be in a position that we are comfortable with how this key utility is being run, if not, there is the possibility that the government will be held hostage by the private sector people as far as that is concerned because a responsible government cannot wake up and not explain reasons for a blackout.”

    Okoh said that the government was weighing several options including, looking into whether the balance sheets have been compromised.

    The BPE chief suggested that analysing the situation to know “if the Discos balance sheets are compromised because they are not able to raise sufficient capital to improve the distribution network and provision of meters, then we have to look at the possibility of how to admit other investors who may have the capacity financially and other technical expertise to improve the distribution infrastructure.”

    He noted that the interest of the citizenry lay in improved power supply at a reasonable cost and not in the power play between the government and the DisCos.

    Despite the ailing condition of the assets and investors’ reluctance to inject more funds to rejuvenate them, the BPE boss said the government has not plan yet resell or re-privatise them.

    He, however, suggested ways out of whatever challenges being faced by the investors.

    Okoh said: “We cannot resell. It is not re-privatisation, it is already owned by the core investors, but if they make that strategic decision to admit additional investors, that will be fine.

    “And, if they admit that liquidity is the challenge and the way they want to solve it is through equity and not debt, then they can admit investors, but if it is a debt solution, then we can approach the banks – the BoI (Bank of Industry) and others.”

    He described privatisation as a way of raising money to make up for government shortages, instead of resorting to borrowing which should be a second option to resolving any financial gap that a corporate organisation or individual faces.

    According to him, the same principle should apply to a country when it is in a shortfall in its liquidity to fund developmental activities. Okoh insisted that the natural fallback situation should be the assets that have not been yielding any benefit to the country as a whole and privatise these companies to raise the liquidity to fund the existing gap.

    He said: “Borrowing or debts should be a sending options not your primary option because there is a cost to even borrowing which also comes back in terms of budgetary provisions that you have to service the debt.

    “The principle of realising the value of assets that you have accumulated in the period of boom should drive a government policy in terms of bridging its cash fall in times of gloom.”

    The success of the stakeholders’ forum will be determined with the implementation of the resolutions and recommendations made participants.

     

  • BPE moves to revive ‘dormant’ privatized firms

    The Bureau of Public Enterprises (BPE) said on Monday it has commenced moves to revive firms that are non-performing 10 years after their privatization to different core investors.

    The Director General of BPE, Mr. Alex Okoh, who disclosed this during the enterprise stakeholders/investors forum in Abuja, said if the firms are rejuvenated, it would benefit the host community where they are located and the government of such areas in term of employment generation and taxes.

    He said the BPE would offer assistance to ensure that the companies are rejuvenated and commence operations in no distant future.

    He said: “We owe that as a duty to Nigerians whose mandate we have discharged by privatising these common assets to the private entrepreneurs. I am delighted today as we are hosting this forum to inject new lease of life into these enterprises and hoping that the ultimate objective of NCP/BPE and Federal Government would be achieved.”

    Okoh said 63 per cent of the 142 privatized enterprises had been performing while 37 per cent were not performing up to expectation.

    He added: “From the time that the privatization program started in the 1980’s, the Bureau has successfully privatised 142 enterprises by December 2017.

    “Out of this number, a total of 94 enterprises have been successfully monitored, covering critical sectors of the Nigerian economy from the transport sector to Vehicle Assembly Plants, oil palm, cement, hospitality, fertiliser, bricks and clay, mines and steel, national facilities, oil and gas, ports, power and communication.

    “From this number of privatized enterprises, 63 per cent of them are performing while 37 per cent are not performing as expected.  This assessment is based on an analysis of the covenants and levels of compliance, challenges and recommendations from 2010 to 2017.”

     

  • BPE: we’ ve reformed 142 public enterprises

    The Bureau of Public Enterprises (BPE) said it has successfully reformed, by way of privatisation, commercialisation and in some cases concessioned, a total of 142 public enterprises, from 1999 till date through various transaction strategies.

    Its Director-General, Mr. Alex Okoh, who spoke yesterday in Abuja during a press briefing, said about N550 billion has been realised as proceeds from the privatisation of the 142 assets by the bureau.

    “However, it is not all of reforms that translate into sales and cash; for the assets that are just perhaps commercialised (that are not sold), you won’t see proceeds being reflected as in the figure mentioned earlier.

    “Of the 142, not all of them were privatised; some were commercialised, while some were merely concessioned.

    “The reform agenda and activities of the bureau have covered various sectors of the economy, including – agriculture, automobile, telecommunication, hotels and tourism, steel and aluminum, etc,” Okoh said.

     

     

  • FG makes N550bn from privatisation of assets – BPE

    Mr Alex Okoh, the Director-General, Bureau of Public Enterprises (BPE), says about N550 billion was realised from the privatisation of some of Federal Government’s 142 assets that had been privatised or commercialised.

    He said this on Thursday in Abuja at a news conference on the organisation’s work plan and other initiatives for 2018.

    Okoh added that Nigeria made 7.8 billion dollars as Foreign Direct Investments (FDIs) from privatisation and commercialisation of 53 enterprises in the past 18 years.

    He, however, said that not all the reforms translated into a sale or cash,

    “For the assets that are just commercialised and not sold, we will not see a proceed figure as some were commercialised while some were concessioned.’’

    According to him, about 37 per cent of the enterprises that have been privatised or commercialised are not doing extremely well.

    This, he noted was due to macro-economic issues, fiscal problems and other issues.

    He said discordant policies fundamentally affect industries, adding that access to capital, especially debt to drive the working operations on a daily basis are priced out of the profitability framework of the enterprises.

    “We are not abandoning these enterprises but looking at how to address the issues that are affecting effective performance of the enterprises.

    “I believe that if those enterprises were not privatised, they would have still been in the same problem, so it is not the privatisation that caused the non-performance but the business environment both from the macro perspective and the micro issues,’’ he said.

    On the challenges in the power sector privatisation, Okoh said there was an on-going review of the gaps in the sector.

    He said that the review was essentially aimed at addressing the fundamental flaws, which includes issues around enumeration of the customers.

    The director-general said enumeration and metering should address the issue of pricing and revenues in the system.

    According to him, the Power Sector Recovery Plan (PSRP) provides some kind of counterpart funding of one billion dollars from the World Bank to help in the provision of some of the needed assets.

    The director-general said that the organisation was not in any running battle with Distribution Companies (DISCOs), but in a collaborative effort because the BPE is a member of its board.

    “We want to help address the challenges in the downstream sector of the electricity industry.

    “We do not take an antagonistic position against them because we believe that these are key business challenges that they are facing,’’ he added.

    Okoh recalled that about N330 billion was paid as compensation of the entitlement of about 49,000 workers when the sector was privatised.

    He stressed that privatisation was not a callous way of depriving workers of their entitlements because those factors were considered before the institution was privatised.

    On privatisation of oil refineries, Okoh said the BPE believes in rehabilitation rather than selling them off to get scrap value now.

    “Through the present initiative of the Ministry of Petroleum Resources, we are able to rehabilitate the refineries, not with government resources, but private sector resources which is what is going on now.

    “Over the years, we have budgeted tons of money for Turn Around Maintenance (TAM) that did not turn anything around.

    “If a private sector investor is coming into that sector and he is bringing his money for the rehabilitation, you better be sure that he will get that rehabilitation done because if he does not he will lose his money.

    “The whole programme is about private sector investors providing the rehabilitation funds directly to the original refinery builders who would rehabilitate the refineries.

    “Over a period of time, the investor through the improvement in the products that are refined would be able to pay himself out,’’ he said.

    He said it was a better deal for government because in future, after amortising payments that were due to the investor, they then return an asset of a better value that could be sold, privatised or commercialised at that time for better value.

    He, however, said there was no plan to sell off the 49 per cent shares government owned in the Nigeria Liquefied Natural Gas (NLNG).

    “We are enjoying the dividends so much that government sees it as one of its best investments so far and the dividends from that particular investment come in billions of dollars and add to the revenue base of the government.

    “The pipelines and depots are part of the assets in the downstream sector that we are presently looking at privatising and they are presently undergoing a strategic review on the best approaches to go.’’

    He listed some of the transactions and initiatives the bureau was presently undertaking to privatise or commercialise.

    They are: privatisation of the Afam Power Plant, which should be concluded between Dec. 2018 and first quarter of 2019.

    Others are restructuring and recapitalisation of the Bank of Agriculture, partial commercialisation of three selected national parks and re-concessioning of the Lagos International Trade Fair Ground.

    The BPE was created through the Public Enterprises (Privatisation and Commercialisation) Act 1999, to diversify the economy and strengthen the private sector as Nigeria’s engine of growth and economic driver. (NAN)

  • BPE: over 60% of privatised firms performing

    Over 60 per cent of privatised enterprises have done well, the Bureau for Public Enterprises (BPE),  has said.

    Its Director-General, Alex Okoh, singled out power companies and the seaports as top performers despite the country’s infrastructural gap.

    Over 140 public enterprises across various sectors of the economy have gone through the process of either full, or partial privatisation and full, or partial commercialisation in the last 30 years.

    Okoh spoke yesterday during the inauguration of the Stakeholders Engagement Committee (SEC) by the Minister of Information and Culture, Alhaji Lai Mohammed, who also doubles as the chairman of the  committee.

    He said: “In the last 30 years of the enterprise reform journey in Nigeria, the Bureau and its predecessor, the TCPC have reformed over 140 public enterprises across various sectors of the economy, including banking and Insurance, oil and gas, power, hospitality, pensions and telecommunications, through the process of full or partial privatisation, full or partial commercialisation and concessioning.

    “Of these privatised enterprises, over 60 per cent have achieved a good level of performance. The power generation companies are performing very well. I can also tell you that the seaports are performing despite some infrastructural constraints.”

    The BPE chief however confirmed that there is a negative perception of privatisation by Nigerians, despite its success, saying the need to change the narrative, necessitated the setting up of the SEC.

    He said: “It can thus be seen that there is something of a mismatch between public perception of privatisation and the reality of its value and contribution to the economy.”

    In his remarks, Mohammed said the current administration recognises and actively promotes the participation of private sector in the strategic economic agenda of the nation.

    He therefore assured the government that the committee will do everything possible to change the narratives, stressing that the function of the government is to provide enabling environment including providing critical infrastructure.

    He said: “let me use this opportunity to reiterate that the current administration of President Muhammadu Buhari recognises and actively promotes the participation of the private sector in the strategic economic agenda of the nation.

     

     

    On the need for the SEC, Okoh  said there is a clear and present need to build support and understanding for the Federal Government’s reform agenda by effectively communicating the considerable benefits of privatisation.

     

    “There is also an urgent need to allay the concerns and fears of key stakeholders, whilst ensuring that the interests of all stakeholders are taken into consideration,” he said.

    Okoh also said the SEC should help curb the activities of usurpers, which tends to compromise and conflict with the statutory functions of the National Council on Privatisation (NCP) and its secretariat, the Bureau.

     

     

     

     

     

  • BPE: Privatised firms hit 142

    The Bureau of Public Enterprises (BPE) said it has privatised 142 enterprises from inception to date.

    Its Director-General, Mr. Alex A. Okoh spoke when he received members of the House of Representatives Committee on Privatisation, led by its Chairman, Alhaji Ahmed Yerima. The lawmakers were on an oversight visit to the Bureau in Abuja.

    Okoh said out of the number, 94 enterprises have been monitored while the rest have been not because “some were either assets sale or in the first phase of privatisation and as such did not fall within the BPE’s monitoring purview”.

    He said out of the privatised enterprises, 63 per cent of them are doing well while the remaining 37 per cent are not performing. The DG attributed the poor performances of the non-performing enterprises to the operating business environment in the country in which many private or privatised public enterprises have either closed down or relocated to neighbouring countries.

    Out of the 142 privatised enterprises, Okoh said 63 were through core investor sale, nine through guided liquidation, one through sale to existing shareholders, five through public offer and two, through liquidation. He added that eight were privatised through private placement, 41 through concession, two through debt/equity swap and 11 through sale of assets.

    Its Head, Public Communications, Amina Tukur Othman who gave the breakdown in a statement by sectors, said five  were in the agric machanisation, eight in automobiles, seven in banking and insurance, six in brick making and six in the cement sector. The others listed are 10 in energy construction and services,12 in hotels and tourism, eight in oil and gas, four in paper and packaging, 19 in solid minerals and mining, seven in steel and aluminum, four in the sugar sector, 26 in marine transport sector, 19 in power and one in telecoms.

     

     

     

  • Transcorp Power meets BPE terms ahead of schedule

    Apower generation company (GenCo), Transcorp Power Limited has met and exceeded its terms of agreement with the Bureau of Public Enterprises (BPE) as mandated in 2013.

    When the Transnational Corporation of Nigeria Plc. took over the Ughelli Power Plant in November of 2013, it presented a strategic plan to increase power  supply to Nigeria’s national grid in order to power more schools, hospitals, businesses and improve the overall standard of living. The power plant was handed over to Transcorp only after the conglomerate agreed to increase generating capacity from 160 megawatts (Mw)  to 670 Mw in at least five years (fifth year ending December 2018).

    President/CEO, Transcorp Plc, Adim Jibunoh, visited the office of the Bureau of Public Enterprises (BPE), Abuja to submit the evidence of this to Director-General, BPE, Alex A. Okoh.

    Mr Jibunoh said: “Transcorp will never stop emphasing how critical power generation is to the success of the Nigeria project. In line with our commitment to improving lives and transforming Nigeria, Transcorp Power Limited has shown a level of enterprise, excellence & execution that should serve as an example to all Nigerians of what we can achieve when we face a challenge with resolve.”

    Transcorp took over Ughelli Power Plant from PHCN (now known as Transcorp Power Ltd) with only four units poorly contributing an average of 160Mw.

     

     

    With systematic recovery of Gas turbine units, Transcorp reached 340 Mw by end of 2013. Transcorp power continued the journey in 2014 and was able to recover seven units in 12 months and total available capacity hit 560Mw by the end of 2014.

    In 2015, Transcorp Power Limited in collaboration with GE (General Electric) replaced 100Mw gas turbine, GT 15 with a 115Mw upgraded capacity. In March 2017, GT 15 was commissioned by the Minister of Power, Works & Housing, Babatunde Raji Fashola and tied to the National Grid.  2017 saw the addition of 105 MW from GT20 and ultimately reached 701Mw available capacity from 16th November 2017.

    CEO Transcorp Power Limited, Kalyana Sundaram credited the achievement to the hard work of the Transcorp Power team. “As happy as we are to announce this achievement which clearly shows that we are staying the course and achieving our short term goals, we are poised to ramp up our efforts as we turn our attention to our long term goal of generating at least 25% of Nigeria’s total power supply.” He said.

    While congratulating the Transnational Corporation of Nigeria for executing on its expansion strategy as promised, Chairman Transcorp Plc. Tony O Elumelu said “This is what we look for as investors. A conglomerate that functions with a clear vision of its future, develops a winning strategy that will go the distance, and then executes that strategy to near perfection.”

    Transnational Corporation of Nigeria Plc (Transcorp) is a leading diversified conglomerate. Focused on acquiring and managing strategic businesses that create long-term shareholder returns and socio-economic impact. Business interests are in four strategic sectors: Power, Energy, Hospitality and Agriculture.

    Incorporated on November 16, 2004 and quoted on the Nigerian Stock Exchange, Transcorp has a shareholder base of about 300,000 investors, the largest of which is Heirs Holdings Limited, a pan-African proprietary investment company.

    Notable businesses include the award-winning Transcorp Hilton Hotel, Abuja; Transcorp Hotels, Calabar; Transcorp Power Limited which acquired Ughelli Power Plc, owner of the 972MW Ughelli Power Plant and Transcorp Energy Limited, operator of OPL 281.

  • DisCos: notice to BPE not force majeure declaration

    DisCos: notice to BPE not force majeure declaration

    The Electricity Distribution Companies (DisCos) yesterday explained that the notice they jointly sent to the Bureau of Public Enterprises (BPE) was not a declaration of force majeure.

    A statement endorsed by the  Association of Nigeria Electricity Distributor (ANED) Executive Director, Research and Advocacy, Barr Sunday Oduntan issued in Abuja yesterday, described the notice as a standard commercial agreement.

    According to the statement, the notice was based on the concerns that the DisCos that are already near bankruptcy, will further be tied to meeting the obligations of their performance agreement with BPE.

    Read Also: Why there is no electricity – Owan

    He said: “Indeed, the notice of force majeure submitted by the DisCos, in itself, is not a declaration of force majeure. It is standard to any commercial agreement, and is predicated on the concern that the DisCos, already on the verge of bankruptcy, will be further constrained in meeting the obligations of their performance agreements with BPE –  no difference from a previous situation in which the regulator, arbitrarily, removed collection losses from the DisCos’ tariff in April 2015, a contributor to the current market shortfall.

    “Unless we begin to see a consistency of sector governance, a critical requirement for the viability and sustainability of the Nigerian Electricity Supply Industry (NESI), it is unlikely that we will achieve the objective of 24/7 power supply, an outcome that all Nigerians deserve.”

    The statement which was a sort of rejoinder, said that clarification followed recent notice of force majeure that were submitted to BPE by the DisCos as a result of the eligible customer regulation by the Nigerian Electricity Regulatory Commission (NERC)).

  • Notice to BPE not declaration of force majeure – DisCos

    Notice to BPE not declaration of force majeure – DisCos

    The Electricity Distribution Companies ( DisCos ) on Thursday explained that the notice they jointly sent to the Bureau of Public Enterprises ( BPE ) was not a declaration of force majeure.

    A statement that the Association of Nigeria Electricity Distributor (ANED) Executive Director, Research and Advocacy, Barrister Sunday Oduntan issued in Abuja yesterday , described the notice as a standard commercial agreement.

    According to the statement, the notice is based on the concerns that the DisCos that are already near bankruptcy, will further be tied to meeting the obligations of their performance agreement with BPE.

    Odutun said that : “Indeed, the notice of Force Majeure submitted by the DisCos, in itself, is not a declaration of Force Majeure, is standard to any commercial agreement, and is predicated on the concern that the DisCos, already on the verge of bankruptcy, will be further constrained in meeting the obligations of their Performance Agreements with BPE – no difference from a previous situation in which the regulator, arbitrarily, removed Collection Losses from the DisCos’ tariff in April 2015, a contributor to the current market shortfall.

    “Unless we begin to see a consistency of sector governance, a critical requirement for the viability and sustainability of the Nigerian Electricity Supply Industry (NESI), it is unlikely that we will achieve the objective of 24/7 power supply, an outcome that all Nigerians deserve.”

    The statement which was a sort of rejoinder, said that clarification followed recent notice of force majeure that were submitted to BPE by the DisCos as a result of the eligible customer regulation by the Nigerian Electricity Regulatory Commission) (NERC).

    ANED said that the Eligible Customer regulation allows for certain customers who consume more than 2 MWhr of electricity per month to leave the DisCo network and contract directly with power generators for the supply of power.

    It added that the primary objectives of this arrangement are to promote competition and increase the supply of power.
    Continuing, he said that “As DisCos, we believe that these are laudable objectives and are nothing less than that which we seek, as we strive to inject the efficiency into our operations that will improve the power supply experience for our customers.

    “While we do not question the legitimacy of the Honourable Minister of Power, Works and Housing’s right to declare Eligible Customers, we believe that the declaration is premature and is inconsistent with the pre-conditions established under the Electric Power Sector Reform Act (EPSRA), 2005.

    In particular, the level of competition envisaged for such declaration, that should be in tandem with sufficiency of power supply, does not currently exist. Nor has there been an implementation of the Competition Transition Charge that is specified under the Act.

    “Why is the issue of Competition Transition Charge important? Eligible Customers are the premium customers that cross subsidize the cost of providing electricity to the residential class of customers. Such cross subsidization, for some DisCos, is based on a ratio of N10/kWh of Eligible Customer consumption to N1/kWh of residential class consumption. The same class of Eligible Customers also contribute an average of 60 percent to DisCo revenues.

    “With the removal of Eligible Customers from the DisCo network, the huge revenue gap that is left is expected to be imposed on the residential class of customers by an increase in their tariffs, under the Competition Transition Charge. An initial analysis of the impact of the Eligible Customer regulation indicates the need for a minimum tariff increase of N4 per kWh on the residential class customers. In other words, residential customers, some of whom are already dealing with issues of affordability, will have to bear the burden of the premature implementation of the Eligible Customer regulation.

    “While there may be policy announcements that try to counter this fact by stating that such increases will not be imposed on the consumers, the question must be, “How will the gap be addressed?” If the answer is via a subsidy, it is then important to highlight that the current market shortfall of N892 billion (through August 2017) is a product of similar commitments that have not been met – a) Debt free books; b) Cost reflective tariff; c) Payment of N100 billion of subsidy; d) Payment of MDA debt; and e) Commitment to return of; and return on investment for the investors.

    Unfortunately, the Eligible Customer regulation will further contribute to the DisCos’ inability to recover the revenues that will enable them to make the capital investment that is critical to injecting efficiency into the supply of electricity to their customers.”

  • BPE rejects DisCos notice on force majeure

    BPE rejects DisCos notice on force majeure

    Director-General of the Bureau of Public Enterprises (BPE), Alex Okoh, has faulted plans by the electricity Distribution Companies (DisCos) to declare force majeure in the power sector, saying there was no basis for such action.

    The DisCos have threatened to resort to such a step following what they termed  the policy directive on Eligible Customers and the Eligible Customer Regulations by the Nigerian Electricity Regulatory Commission (NERC).

    Okoh, in a letter,  challenged the assertion by the DisCos that there has been a change in law and political force majeure event pursuant to certain clauses in the Performance Agreement the core investors of the DisCos signed with the BPE, stating that  he rejected the notice to declare force majeure by the DisCos.

    BPEs Head, Public Communications, Chukwuma Nwokoh, in a release yesterday, said the DisCos had claimed that the policy directive on Eligible Customers and the Eligible Customer Regulations have resulted in a change of law which prevents them from fulfilling their obligations under the Performance Agreement.

    But he pointed out that Okoh countered, stating that pursuant to the Electricity Power Sector Reform Act, 2005, it is obvious that the Minister of Power, Works and Housing, is empowered to issue the policy directive specifying the class, or classes of end-use customers that shall constitute Eligible Customers. In the same vein, NERC is similarly empowered to issue Eligible Customer Regulations.

    He said:“As you are aware, this is the same Act which midwifed the process whereby the power assets were privatized to the core investors. Given that the Declaration and the Regulations were lawfully and validly issued by the Minister and NERC, and that there has been no change in the law giving rise to a political force majeure event, we are unable to see the basis for the issuance of the notice.”

    Okoh stressed that the BPE, as the contracting party on behalf of the Nigerian government to the agreements which governed the privatisation of the power assets to the core investors, rejects the notice to declare force majeure.