PHCN investors give condition for 75% outstanding payment

PHCN14 August 2013, Abuja – The Roundtable of Electricity Distribution Companies, Discos, Tuesday, urged the Federal Government to complete the payment of the Power Holding Company, PHCN, severance package for disengaged staff before the August 21, 2013 date set for the completion of payment from the investors.

Following the National Council on Privatisation, NCP, dateline for the privatisation of the Discos, the investors are expected to pay the balance of 75 per cent for the purchase of the entity on August 21.

But the Disco Roundtable, Tuesday told the Minister of Power, Prof. Chinedu Nebo that lenders are insisting on verifying the evidence of the payments before lending them fund to complete the outstanding 75 per cent payment.

Chairman of the Roundtable, Dr. Ransome Owan, said: “It is a condition precedent that the Discos would be handed over free from all legacy liabilities. Our lenders are mindful of this and are reluctant to approve loans and condition draw down. Therefore, it is vital that full payment obligations to PHCN employees be finalised before the Long Stop Date of August 21, 2013. Lenders expect evidence of these payments before we can draw down on funds to complete our payments.”

Besides, the Discos sought the Ministry’s assistance in the release of the subsidy contained in the Multi-Year Tariff Order, MYTO, model for each of the Discos.

Owan also asked the Minister to ensure adequate funding to the Transmition Company of Nigeria, TCN, to evacuate power produced for delivery to Disco to avoid stranded investment and little benefit to consumers.

He added that the Ministry should provide “extended five-10 years special tax holidays for electricity distribution companies akin to the Telecom startup assistance to mitigate tariff increases and high cost.”

The Roundtable asked the Ministry to consider extending the Long Stop Date to September 21st, 2013 to allow for the full satisfaction of all Condition Precedent items by the government.

Speaking on the 75 percent payment, the Minister assured the Discos that the Federal Government would do all in its capacity to complete the payment by the end of August.

He said: “You have given us some tasks; on one hand you are asking us to meet up with all the conditions precedent by 21st of August, and on the other hand, you are telling us that while we meet up with our own, you are not going to be able to meet up with your own. We will do whatever we can, but there is no way we can ensure full payment by the end of August.”

Nebo revealed that from the proceeds of the National Integrated Power Projects (NIPP), $1.6billion has been set aside for the improvement of the TCN.

“Parts of the proceeds from the sale of the NIPP projects, as much as $1.6 billion, is been delegated to the improvement of TCN to give us a well deserved transmission network and that should not be your problem now,” he said.

He assured that the Ministry would ensure that it settled the PHCN employees in the Generation Companies this week, adding that government would commence the payment of the staff in the DIscos.

He said: “We understand that you are supposed to inherit companies that are indeed free from all legacies liabilities and we are working on that. We also want to assure you that at the rate that these payments are being made to staff of the various PHCN successor companies that you are acquiring, by the end of this week, almost all the GENCOs would have been paid, and then, we begin with the DISCOs.”

He said the Ministry has decided to hold the stakeholders’meeting that the Discos demanded for in the next few days.

His words: “There are obvious reasons that we have chosen to settle the GENCOs and the PHCN headquarters, and then move on to the distribution companies. I will not delve into this, until the stakeholders meeting which we have already decided to hold within the next couple of days.

“With regard to the transition electricity market, three conditions precedent that you mentioned, metering of the grid and constitution of a dispute resolution panel are receiving attention. Be rest assured that we not oblivious of these things.”

He said the Ministry is aware of the challenges highlighted by the Roundtable and had since moved to tackle them.

He accepted that the Discos were at their infancy and would be encouraged to grow through the provision of an enabling environment.

“I would like to share with you that the Federal Ministry of Power is fully aligned with your dream to light up Nigeria.

– John Ofikhenua

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