Power Distributors Issue Condition For Recapitalisation
The Association of Nigerian Electricity Distributors has said the recapitalisation of Discos, being canvassed by the Transmission Company of Nigeria, will happen when investors in the Discos see a pathway of recovering their investments.
In his address at the just-concluded two-day second seminar for the preparation of Performance Improvement Plans by Nigerian Discos, the Chief Executive Officer, Association of Nigerian Electricity Distributors, Azu Obiaya, observed that there had been so much calls for the recapitalisation of Discos recently.
TCN, on several occasions had called for the recapitalisation of Discos, as it had argued consistently that the lack of investments in power distribution network was affecting transmission infrastructure negatively.
“The Nigerian people are not connected to our (TCN) network. They are connected to the distribution network. So the Nigerian people in a way do not feel what we are doing. But the fact is that even our equipment are not guaranteed because there is no investment in the distribution network. So the Discos just have to recapitalise,” the Managing Director, TCN, Usman Mohammed, had stated.
But in an apparent response to the calls for Discos’ recapitalisation, while speaking at the second PIP seminar, Obiaya stated that rational investors would need to see how they would recoup their investments before they could go ahead to recapitalise the firms.
The ANED boss said, “Recently, there has been a drumbeat for recapitalisation of the Discos. There are two principal approaches to recapitalisation – one, we won’t mention today and the other is investment. For the latter to occur, rational investors would need to see a pathway of recovering their investment for them to make the leap.
“It is my hope that the PIP guidelines, if implemented faithfully, efficiently and consistently, will provide this pathway, as necessary to re-orientate the sector towards commercial viability and sustainability.”
Obiaya told participants at the event that the seminar was triggered by the Performance Improvement Plan requirement of the Federal Government’s Power Sector Recovery Programme.
He added, “For us, the process was triggered by the informal dissemination of the draft PIP that was issued in the fourth quarter of 2017, which led to the first PIP seminar that was dedicated exclusively to the Disco board members.
“With the recent formal issuance of the PIP guidelines by NERC (Nigerian Electricity Regulatory Commission), we thought that it was critical that we put together the PIP Seminar II, to bring together, not only the board members and the operators, but also other critical stakeholders.”
Obiaya said a review of the PIP guidelines would indicate three central and recurring themes, as he outlined them to include an extensive stakeholder consultation, robustness of process and outcomes in the context of efficiency.
He said, “This seminar seeks to address all three of these central themes. The information that will be provided to you is information that we hope will robustly guide the activities that will result in the required PIP/Performance Agreement outcomes of improved service delivery, Average Technical, Commercial and Collection loss reduction, increased connections, improved energy delivery, etc.
“This information includes analysis of data from the sector, international best practices, experiences of Disco implementation of some aspects of PIP, proposed market strategies, etc.”
Representatives of the Manufacturers Association of Nigeria, power generation companies, multi-lateral institutions were also present at the seminar.