DisCos Kick Against Fidelity Bank Takeover, Vow to Battle FG
The Integrated Energy Distribution and Marketing Company receiver/manager’s says it was the legal and rightful owner of 60 per cent (controlling and managing) shareholding interests in the Ibadan Electricity Distribution Company.
Also, the management of Benin Electricity Distribution Company Plc said that there was no legal basis for the takeover of the company following the purported activation of the call on its collateralised shares by Fidelity Bank.
Both firms disclosed this in reactions to the announcement of the Federal Government on Tuesday regarding the takeover of Kaduna, Benin, Kano DisCos and Kaduna electricity distribution companies by Fidelity Bank Plc after the bank initiated action to take over the boards of the three Discos.
Power experts also have urged the Nigerian Electricity Regulatory Commission (NERC) to further probe the entire 11 Distribution Companies (DisCos) following the shake-up of at least five due to insolvency and underperformance.
The government had also announced through its Bureau of Public Enterprises that with the takeover of Ibadan Disco by the Asset Management Corporation of Nigeria, the BPE had obtained approval from the Nigerian Electricity Regulatory Commission to appoint an interim managing director for the distressed power firm.
The government further stated in a notice that it was restructuring the management and board of Port Harcourt Disco to forestall the imminent insolvency of the utility. The notice was signed by the Director-General, BPE, Alex Okoh; and Executive Chairman, NERC, Sanusi Garba.
But in its reaction on Wednesday to the takeover and restructuring announcement by the government, Ibadan Disco, though its receiver/manager’s nominee, urged the public to ignore the two Federal Government agencies – NERC and BPE, on the purported takeover control and management of IBEDC.
It says the purported takeover was announced “in spite of a subsisting order of a court in Suit No. FHC/L/AMC/92/2021, granted on September 8, 2021 and varied on December 3, 2021.”
It made the claims in a statement through its counsel, Kunle Ogunba, SAN.
The receiver/manager’s nominee said in the statement signed by Ogunba that IBEDC was unlawfully included in the announcement, adding that the government’s publication was “ill-conceived”.
The statement read in part, “The appointment of a receiver/manager; Assets Management Corporation of Nigeria and its Nominee; ‘Kunle Ogunba, SAN have been duly registered at the archives of the Corporate Affairs Commission, Abuja.
“The esteemed members of the public are hereby enjoined to ignore the publication as the BPE and NERC both in their individual and collective capacities have no power(s) under any subsisting enactment to take the steps ‘they’ have taken as indeed there is no legislation tagged ‘business continuity framework’ anywhere codified in the Nigerian laws.
Also kicking against the announcement of the government, the management of Benin Electricity Distribution Company Plc said in a statement that there was a basis for the takeover of BEDC, as it assured customers and stakeholders of continuing operations.
It insisted that there was no legal basis for the takeover of the company following the purported activation of the call on its collateralised shares by Fidelity Bank.
The management of the firm, however, added, “There is no contractual, statutory or regulatory basis for such. For the avoidance of doubt, the shares of BEDC have not been given as security to Fidelity Bank or to any other party.
The management of BEDC Plc warned that “any attempt by Fidelity Bank and/or BPE to intervene in BEDC in the manner being reported will be illegal, unlawful and will be resisted.”
Consequently, the company urged its customers, investors and partners in the electricity business to ignore the trending reports while assuring them of continuing smooth operation and that it remained focused on its mission to ensure the delivery of quality and reliable electricity to the people of Edo, Delta, Ondo and Ekiti states.
Other Discos affected by the announcement of government could not be reached for comments at the time of filing this report, as the telephone numbers of some of their spokespersons did not go through when contacted.
But the Minister of Power Abubakar Aliyu, said on Wednesday that he had been briefed by the NERC and BPE on the recent events relating to corporate governance in Kano, Benin, Kaduna, Ibadan and Port Harcourt electricity distribution companies necessitating a change in the respective board of directors and management.
“The changes announced were as a result of the receivership of the core investors in Kano, Benin, Kaduna and Ibadan Discos, whereas the actions in Port Harcourt are sought to provide much-needed liquidity and prevent the insolvency and risk of collapse of the utility,” the minister stated in a statement issued in Abuja by his media aide, Isa Sanusi.
He added, “In implementing the changes, the ministry shall ensure that the changes in corporate governance do not impact on the service and stability of the Discos.
“We wish to reaffirm that while the government continue to hold a 40 per cent equity stake in all the Discos, the utilities are still private sector-led ‘going concerns’ falling under the provisions of the Companies and Allied Matters Act and subject to regulation by NERC.”
Aliyu said the power ministry had received a confirmation from the BPE and the Central Bank of Nigeria that in exercising the rights of lenders to the core investors, the financial institutions did not retain the ownership of the shares and management of the Discos in perpetuity.
He said, “It is therefore expected that clear timelines for the exit of the banks would be prescribed by the regulators as and when appropriate.
“We wish to reassure electricity consumers that the recent changes in the governance of the Discos would not adversely impact on the ongoing reform initiatives including the National Mass Metering Programme.”