Nigeria’s electricity investors are yet to reap the returns on their investments five years after privatization. A total of N427billion ($1.2 billion) was paid to acquire 60 percent stakes in the 11 electricity distribution companies (DisCos) in 2013, but the core investors have said they are yet to recover the investments or make profit from the defunct PHCN assets, saying that the records given by the Bureau of Enterprises (BPE) were inaccurate and outdated.
Tukur Moddibo, chairman of Aura Energy Company (AURA), the core investor in Jos DisCo, who spoke for the investors at a joint briefing in Abuja, said the firms have not gotten any return on their investment.
The investors noted that they had been unable to carry out due diligence on the assets before purchase due to labour crisis. Moddibo 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 of a financial audit of the firms when they were under PHCN.”
The investors explained 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 N213billion CBN loan which they are paying interest for.
Sunday Oduntan, executive director, Research and Advocacy at Association of Nigerian Electricity Distribution (ANED) who was also present at the event, said, “DisCo investors, who paid $1.4bn (about N427bn) for the distribution assets have not made any return on their investment, 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 hinders 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, N78billion 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.
Moddibo also said the investors would want to meet with Babatunde Fashola, minister of power, works and housing, on the issue of service improvement, adding, “We have invested much in the utility but we have not made any gain.”
The investors had said they are ready to quit if the government will refund their acquisition investments as they have declared a force majeure twice, a condition for their refund but the federal government refused to accept their quit notice.
