Power Privatisation – Banks unwilling to release fund

Central-Bank-of-Nigeria-CBN14 August 2013, Abuja – Nigerian banks are unwilling to lend funds to the preferred bidders of the 11 privatized Electricity Distribution Companies due to uncertainty associated with the settlement of entitlements of former Power Holding Company of Nigeria, PHCN, workers.

The owners of the DISCOs, who made their plight known to the minister of power in Abuja on Tuesday, urged the federal government to complete the Condition Precedent (CP) of the privatisation process, and extend the Long Stop Date to September 21.

Chairman of the Distribution Companies, DISCO, Roundtable, Dr. Ransome Owan, at a meeting with the Minister of Power, Prof. Chinedu Nebo, said, “We pray the minister to conclude all labour issues and meet all CPs before August 21st.”

Highlighting the challenges of DISCOs, Owan maintained that the complete payment of labour liabilities is pertinent as their lenders were unwilling to approve loans with which to remit the balance to the government before the Long Stop Date elapses.

“It is vital that full payment obligations to the current PHCN employees be finalised before the Long Stop Date. Lenders expect evidence of these payments before we can draw down on funds to complete our payments,” he noted.

Dr. Owan, who spoke on behalf of the DISCO representatives, said in addition to completing the labour issues, the minister should consider extending the Long Stop date to September 21st to allow for the full satisfaction of all CP items by the federal government.

It would be recalled that the bidding process for the preferred distribution companies included a down payment of 25 percent as at 21st March 2013 and the balance due for payment on August 21st, after meeting other requirements.

In his response, the Minister of Power Prof. Chinedu Nebo assured the roundtable members of continuous support as government is doing its best to settle the condition precedent including complete payment of staff severance package before the final handover.

“At the end of this week, almost all the Generation Companies (GENCOs) would have been paid as well as staff of the PHCN headquarters. Then we would start with the Distribution Companies (DISCOs),” he said.

Other considerations given by the DISCO Roundtable include, convening a stakeholder’s meeting before August 21st to check the progress before the Long Stop Date, releasing the subsidy contained in the Multi Year Tariff Order, MYTO, model for the DISCOs, and creating a 5-10 year tax holiday for the new DISCOs to mitigate tariff increases and high cost.

– Simon Echewofun Sunday, Daily Trust

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