Investors in the Nigeria’s power distribution yesterday declared year-in-year losses on their $2.3 billion investments, three years after they took over the power assets, stating that they could be pushed to declare a force majeure with the spate of revenues shortfall envisaged to hit N809 billion by December (next month).
Force majeure is difficult and unforeseeable circumstances that prevent someone from fulfilling a contractual obligation.Executive Director of the Association of Nigeria Electricity Distributors (ANED), Sunday Oduntan, who disclosed this at a press conference in Lagos, blamed government’s inability to play its roles in the power assets share sales and performance agreement, including refusal to pay debts on power bills, which has accumulated to over N100 billion.
Specifically, he faulted the call by business mogul, Alhaji Aliko Dangote, for reversal of power privatisation and withdrawal of the assets from the private investors despite these challenges. “An additional assertion by Alhaji Dangote is that the investors ‘went in without even understanding what they were doing’. It would be difficult for anyone to suggest that people, seasoned and successful investors, who committed $2.3 billion of their money, 30 per cent or $690,000,000 of which is equity, did so without knowing what they were doing,” Oduntan said.
He emphasized that while it is fair to state that inefficiencies, corruption and limited information associated with the Power Holding Company of Nigeria (PHCN) is still a challenge to the privatisation, “the bigger challenges are adverse macro-economic changes (devaluation of the naira and inflation), gas pipeline vandalism, limited gas supply, regulatory uncertainty, lack of respect for contract sanctity and government policy inconsistency.”
In spite of these challenges, the DISCOs, he said, have made progress. According to him, “We have reduced technical and commercial losses (even with the limited capitalisation); we have improved billing systems; we have improved ICT and GIS infrastructure; we have set up call centres addressing over two million queries from customers; we have reduced down time due to improved network maintenance and upgrades; we have recruited thousands skilled personnel, significant grid metering achieved, etc.”
Stating that the government is still owing the distribution companies over N100 billion, Oduntan said that the investors “will be left with no choice than to declare a force majuere and we pray, we don’t get to that level.”
The government, he maintained, “expects us to run and it is tying our legs and hands. For three years, we have been on track inside the sun ready to run, but the government has tied our legs. What we are saying is that the government should do the right things to prevent total power system collapse.” Stating that the power distribution firms “have done a lot,” the ANED boss admitted, “but we have not done enough.”
The Generation Companies (GenCos), he said, have also made significant capital investments towards capacity enhancements, with specific examples of Egbin, Geregu and Ughelli power plants, resulting in increased generation.