Sell Your Shares in Power Firms, Investors tell FG

Babatunde-Fashola-0405

Power distribution companies have said that the Federal Government should consider selling part of its 40 per cent stake in the various Discos in order to help raise the needed liquidity in the sector.

In a reply to comments made by the Minister of Power, Works and Housing, Babatunde Fashola, investors in the Discos stated that they entered into an agreement at the point of sale of the companies not to sell more than five per cent of their shares for a period of five years.

Fashola recently noted that there was financing challenge in the sector where distributors who own 60 per cent of the undertaking need to raise capital to buy and supply meters, as well as replace aging assets.

The minister had said, “The opportunities that I see for investors are enormous. Why can Discos, for example, not divest some of their shares in order to raise funds to finance the business?”

But in response to the minister’s comments, the Executive Director, Association of Nigerian Electricity Distributors, an umbrella body for the Discos, Mr. Sunday Oduntan, who spoke on behalf of the investors, argued that the government also had shares in the power firms and should consider divesting some its equity in the firms based on the legal constraint facing those who invested in the companies.

He said, “The investors point out that the agreement at the point of sale does not allow them to sell more than five per cent of their shares in five years. So even if they wish to, there are legal constraints that they cannot circumvent.

“Since government owns 40 per cent of the shares, government could consider divesting part of its own to help raise the needed liquidity in the sector.”

On issues pertaining to the metering of power consumers, Oduntan said, “The Discos are the most willing party to meter customers so they can cut down the cost they bear on energy theft. They are planning to do customer enumeration to determine their customer strength but they need fund to do that. A Disco said to do such enumeration in just one state, it was given a bill of N2bn.”

Source: Independent Energy Watch Initiative

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