DisCos kick against TCN managing FG’s planned N72bn power investment

The electricity Distribution Companies (DisCos) in the Nigerian Electricity Supply Industry (NESI) have kicked against the Federal Government’s choice to engage the Transmission Company of Nigeria (TCN) to manage its N72 million planned investment in the nation’s power sector.

Recall that the Federal Government had announced plans to engage the TCN in its proposed investment worth about N72 billion in the DisCos for upgrade of its networks and efficient distribution of about 2000 megawatts of electricity, which according to it, was laying idle.

But in a statement on Sunday by the Association of Nigeria Electricity Distributors (ANED), the DisCos said they would not support the idea as they had no confidence in TCN to manage the investment better than them, maintaining they hold a major percentage shareholding of the investment in the subsector.

“It is not likely that TCN, a legacy Power Holding Company of Nigeria (PHCN) entity, with its historical contracting and project management limitations will implement electricity distribution projects better than DisCo investors that have N427 billion ($1.4 billion) of equity and debt invested in the sub-sector, with a motivation to recover their investment.

“The premise of the privatization was the need to bring in private sector expertise while removing from the government balance sheets, the potential for outcomes of cost overruns, inefficiency and white elephant projects. This initiative creates the potential for a return to the old days of the government trying to implement projects that it is not suited for.

Read also: POWER: Blackout looms as GenCos threaten to shut plants over generation limit

“It should also not be forgotten that the Discos are already carrying, out of the total sum of N210.61 billion, 72.25 per cent or N152.16 billion of legacy gas and energy debt (incurred by PHCN) associated with the Central Bank of Nigeria’s Nigerian Electricity Market Stabilisation Facility (NEMSF), a debt unconnected with the DisCos, a contravention of the debt-free requirement, that was a fundamental contractual requirement of the sale of the distribution assets.

“The most important objective, that can help NESI achieve the privatization objectives of efficiency; improved and increased power supply; national economic growth, etc., is the attainment of an alignment of the gas-to-power, technical, commercial and risk frameworks.

“Without such an alignment, interventions such as the N72 billion investment in the distribution network will, unfortunately, continually come to nought,” the statement read.

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