Strategic Unbundling and Sale of Electricity Distribution Companies
In a significant move to overhaul Nigeria’s electricity distribution framework, the Federal Government has commenced the unbundling of 11 electricity distribution companies (DisCos), aiming to boost operational efficiencies across the sector. This announcement was made by Nigeria’s Minister of Power, Adebayo Adelabu, during a meeting with the Senate Committee on Power in Abuja. This strategic initiative seeks to restructure the DisCos into more manageable entities along state lines, reflecting a concerted effort to enhance service delivery and accountability in power distribution.
The Impetus for Restructuring
Minister Adelabu emphasized that the size of some DisCos, such as the Ibadan DisCo covering seven states, hampers their ability to function efficiently. This restructuring will not only make these companies more manageable but will also involve state governments more closely in the management and operations of the DisCos, ensuring localized accountability and improved performance metrics. The Federal Government maintains a 40% ownership in these firms, signaling a renewed commitment to intervene and correct the longstanding inefficiencies plaguing the sector.
Sale of Underperforming DisCos
Compounding the restructuring, the government has also mandated the sale of four DisCos currently under the management of banks and the Asset Management Corporation of Nigeria (AMCON), due to their failure to repay loans. These include the Abuja, Benin, Kaduna, and Kano Electricity Distribution Companies. This decision follows the realization that the original private sector operators lacked the necessary expertise and financial robustness to effectively manage these utilities. The upcoming sales are intended to place these entities in the hands of capable technical operators who can meet the demands of the utility management sector.
Legislative and Regulatory Support
The Senate Committee on Power, led by Senator Eyinnaya Abaribe, expressed strong criticism of the DisCos for their inefficiency and failure to meet the expectations post-privatization. The committee has supported the need for an overhaul and is pushing for rigorous regulatory measures that could include revoking licenses of non-performing firms and enforcing strict compliance to operational standards set by the Nigerian Electricity Regulatory Commission (NERC).
Addressing Legacy Issues and Future Directions
The minister also highlighted over 100 uncompleted projects by the Transmission Company of Nigeria (TCN) dating back to 2001, underscoring a history of mismanaged investments and inadequate project completion in the sector. To address these longstanding issues, the government has prioritized the completion of these projects to improve the impact on power users significantly.
Moreover, a notable failure was discussed regarding a $200 million initiative started in 2003, intended to close the metering gap with the provision of three million meters, which never materialized. To combat this, the Federal Government has established a Presidential Metering Council, chaired by Minister Adelabu, tasked with acquiring and distributing a minimum of two million meters annually to Nigerian consumers, aiming to close the current eight million metering gap within the next four to five years.
Conclusion
The unbundling and subsequent sale of the DisCos represent a pivotal shift in Nigeria’s approach to solving its chronic power distribution challenges. By introducing more manageable and accountable operational units and ensuring competent technical management, the Federal Government is taking a proactive stance toward revitalizing a sector critical to the nation’s economic growth and development. These measures, coupled with increased regulatory oversight and strategic investments in infrastructure, signal a robust framework aimed at achieving a stable and reliable power supply for all Nigerians.
