BEVERLY HILLS, June 18, (THEWILL) – President Muhammadu Buhari has rejected the possibility of the federal government backing a unilateral takeover of the 11 electricity distribution companies (Discos) by state governments following the poor performance of the Discos since the power assets were handed over to the private sector in 2013.
The President made his position known in a response to the recommendations of the National Economic Council (NEC) Ad hoc Committee on Ownership Review of the Discos and Power Sector Review headed by the Governor of Kaduna State, Mallam Nasir el-Rufai.
NEC had mandated the el-Rufai committee to investigate the ownership structure of the Discos, to establish the equity shareholding of the states and to carry out a forensic audit of the bank accounts of the Discos.
Though the power distribution firms have since gone to court to stop the forensic audit, the committee also recommended the takeover of the power assets by the states, but Buhari rejected the recommendation.
In a letter signed by the Chief of Staff to the President, Prof. Ibrahim Gambari, and addressed to el-Rufai and the Chairman of the Nigerian Electricity Regulatory Commission (NERC), Prof. James Momoh, Buhari instead recommended proper regulation of the power sector by NERC.
The letter, dated June 5, 2020 and with reference number: SH/COS/08/1/A/1171, is entitled ‘Re: National Economic Council (NEC) Ad hoc Committee on Ownership Review and Analysis of Discos and Electricity Sector Review.’
It said: “Further to the enclosed letter GH/KD/S of April 27, 2020 on the above subject, kindly be advised that His Excellency, the President, has: (a) noted with appreciations the final report of the NEC ad-hoc committee on ownership review and analysis of the Discos and the electricity sector.
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“However, state governments, under the auspices of the National Economic Council, cannot unilaterally change the ownership of Discos without the endorsement of other shareholders, FGN and private investors, through the appropriate board resolution.”
According to the letter, Buhari also “directed therefore, that NERC reviews and where applicable, develops an implementation plan for the regulatory actions suggested in the reports from the NERC Committee and Power Working Groups, and that quarterly updates on implementation by all actors be provided to the president, and NEC through the vice president shall also be briefed quarterly.”
The letter added that Buhari “directed that to ascertain the fair shareholding of all electricity distribution companies, NERC submits upon completion, its forensic audit and Regulatory Asset Valuation report and revised shareholding structures as of December 31, 2019 with the accompanying board resolutions for His Excellency’s considerations.”
The president asked the Ministry of Finance, Budget and National Planning, as well as the Ministry of Power to work with the NERC and the International Finance Corporation (IFC) on the forensic audit, from which the commercial structure of the federal government interventions in the Discos under the Presidential Power Initiative could be worked out.
In addition, he directed the NEC’s ad hoc committee to cease further communications with any of the federal government’s agencies in the power sector, to enable the NERC to undertake its regulatory job.
