FG should refund our N427bn in 24hours, We’ll exit– DisCos’ Investors
Electricity Distribution Companies (DisCos) investors yesterday said that considering the unending issues in the power sector in Nigeria, they are willing to exit or handover the distribution assets back to the Federal Government, if it refunds the sum of $1.4billion (427 billion) paid to buy the assets in 24 hours.
Recall, the Minister of Power, Works and Housing, Mr Babatunde Fashola said the DisCos bought the assets of the defunct Power Holding Company of Nigeria (PHCN) with their eyes wide open therefore, should exit if could not continue.
However, in a World Press Conference of the Association of Electricity Distributors’ Investors and the Association of Nigerian Electricity Distributors (ANED) in Abuja, the representative of the investors and the Chairman, Jos DisCo, Tukur Modibbo said, Jos DisCo bought the company for $82billion in 2013 and would be willing to take $72bn if the Federal Government pay in 24hours.
“We in Jos Disco, we bought our DisCo cash down for $82 billion in 2013, we are willing to take $72billion in 24hours to leave. We are giving the Federal Government $10billion discount”, he said.
Corroborating Modibbo’s statement, the Chief Operating Officer (COO), Ibadan DisCo, Engr. John Ayodele said, “if you can refund their money in 5 minutes, they will leave in 10 minutes.
“No investor wants to stay for one minutes. However, the one they returned in Yola since 2015 as we speak today, no kobo has been paid. So you can imagine the frustration of saying I want to go to government and say I want to leave, then you will have to wait till 2029 before you get your money and you will be paying interest on that loan till they pay it. By the time government will refund you, the loan itself will not be paid, you will use that money to only pay the interest on it”, he said.
Meanwhile, ANED’s Spokesman Barr. Sunday Oduntan said, the DisCos investors who paid $1.4billion (N427) for the distribution assets have not made any return on their investment, a condition which was the basis of the investment after the five-year performance period.
“Even worse is that, with current conditions, it is unlikely that they will recover their investment, which is already in the negative, anytime in the near term. However, this lack of sight of a return on investment, certainly, does not encourage the injection of borrowed capital or equity that is key to driving the turnaround of NESI or providing the efficiency and signing that will result in improved generation and the resultant tariff reduction”, he said.
Rolling out the issues from the investors’ perspective, Modibbo said, investors took over the privatised assets without technical or financial audits.
“We have forgotten that (Labour) National Union of Electricity Employees (NUEE) was vehemently against the privatisation of the sector. And you dire not walk into any premises of the defunct PHCN with a white man or even come with a group of people. They will feel you are coming to take over their livelihood, what they believed to be their personal turf. So, we had to rely on records that had been given to us by Bureau of Public Enterprises (BPE).
“I can tell you that all of those records were not accurate. There was no technical audit to see list of the assets of the defunct PHCN. Yes, 30 transformers or 60 transformers, this number of length of cables, it did not tell whether these transformers were online or they have packed up for long, or moribund completely.
“It will not tell whether all the alminium conductors are of the same sizes, no financial audit, no external audit. It was what they left behind that we took. And we complained that we didn’t have due diligence. Now BPE and the regulator (NERC) agreed that we should take over, institute independent studies and confirm the actual state of affairs and then you come back for negotiation.
“ In particular, the level of the Aggregate Technical Commercial and Collection Losses (ATC & C), they agreed to that. They all set an imaginary loss level of 40% especially for us in Jos that I know very well. And when we undertake the studies through independent consultant, they confirmed that the loss levels in Jos were 62% but they only agreed to 58%. So abinicio, the loss levels were faulty”, he said.
The investor said, on the CBN loan, “I can tell you, in Jos, we collected N16billion but before the money came to us, N10billion was taken out to pay for gas legacy debt that was hanging before we bought the company.
“We still carry that cost today and pay interest on that N10bn. We were compared to issue letter of credit to support our payment to NBET. The fact that we took that amount and kept it aside which was about N2billion. So, out of the N16billion that we were supposed to have collecte from CBN as our facility at single digit interest rate, we only utilised N4billion in the DisCo and what we did with that N4billion was to order for meters.
“You can see, we are paying interest on N16billion to CBN but the DisCo benefited N4billion because even before the money came, N10billion was taken, this is the loan they are claiming they are assisting the DisCos with.
“I want to appeal to the Minister, he has been having meetings with the stakeholders and he has limited this stakeholders that I know to operators. We borrowed N12billion from United Bank for Africa, and thank God we borrowed in naira, our colleagues who took their money in dollars are weeping blood today because you know what dollar has become.
‘We borrowed N12billion, to date, we are paying between N9billion and N10billion but we still owe the principal amount of N12billion to N13billion. What we paid that N9billion for was just simply interest, how can we survive?
“And the Minister keep saying that we are not investing. If I came to you four years ago and collected N2billion and till today I have not given you any kobo in return, and I come back and say look I need more money. I need another N500million to invest in the sector, to buy more meters, more transformers would you listen to me? This is the struggle we have with our shareholders.
“When we return to them to say, we nee money to invest, they say look, the money we gave you to buy the assets has not come back. You can imagine if someone who has invested N2billion in buying this assets has put it in a Fixed Deposit Account even at 4%, how much will he have today?
“So we want the Minister to call us to ask us why we are not investing and also find out why are the banks not willing to touch the Discos at all, because we are not bankable. All the parameters that are supposed to make us a business are faulty, they are not there. We are investing but we are not making any profit”, he said.
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