Nearly five years after core investors put $1.2 billion (about N427bn) to acquire 60 per cent stakes in 11 electricity Distribution Companies (DisCos) in 2013, they say they are yet to recover the investments or make profit.
The investors disclosed this yesterday in Abuja at a joint briefing by the Association of Electricity Distributors and Investors and the Association of Nigerian Electricity Distributors (ANED).
The Executive Director, Research and Advocacy at ANED, Chief Sunday Oduntan said, “DisCo investors, who paid $1.4bn (about N427bn) for the distribution assets have not made any return on their investments, a condition which was the basis of the investment after a five-year performance period.”
He revealed a N1.3 trillion market shortfall in the DisCos’ financial books that hindered their performance on improved metering, customer service and increased customer connections.
The DisCos’ operators also decried wrong investments by the Rural Electrification Agency (REA) in cities instead of unconnected rural areas using the $350m World Bank fund that could have addressed deficit in the electricity market.
“Additionally, N78bn has been put in the budget for “distribution” projects to be implemented by the Transmission Company of Nigeria (TCN). Categorically, until the tariff gap is addressed by the government, we do not see a pathway to meeting both commitments,” they said.
Chairman of Aura Energy Company (AURA), the core investor in Jos DisCo, Alhaji Tukur Modibbo, who spoke for the investors said the firms have not gotten any return on their investments.
Modibbo said the labour crisis during the peak of the privatisation in 2013 hindered the potential investors from doing a technical due diligence of the assets before they made payment to the Bureau of Public Enterprises (BPE).
He said: “I was part of the team; we had to rely on records given to us by BPE. I can tell you that the records were not accurate as there was no technical audit or a financial audit of the firms when they were under PHCN.”
The investors said they found that the estimated Aggregate Technical, Collection and Commercial (ATC&C) losses, customer enumeration and metering requirement by BPE were wrong, coupled with huge old legacy debts which the DisCos took from the N213bn CBN loan which they are paying interest for.
Modibbo said the investors would want to meet with the Minister of Power, Works and Housing, Mr Babatunde Fashola, on the issue of service improvement. “We have invested much in the utility but we have not recorded any gain,” he added.
The investors said they are ready to quit if government would refund their acquisition investments as they have declared a force majeure twice, a condition for their refund with the Federal Government refusing to accept their quit notice.