09 November 2017, Sweetcrude, Lagos — Two years after the core investors of the Yola Electricity Distribution Company, Yola DisCo, declared a force majeure owing to their inability to operate under the reign of terror unleased by Boko Haram, the Federal Government is yet to find any investor interested in operating the utility company, SweetcrudeReports has learnt.
In 2015, owner of Yola DisCo, the Integrated Energy and Distribution Marketing Company, IEDM, had returned the company to the Federal Government.
According to findings, investors were unable to access the facility for business due to the Boko Haram insurgencies battling the state.
This, by implication, brings the number of DisCos privately operated to 10 instead of 11.
According to our source who claimed anonymity due to the sensitivity of the issue, the government has been experiencing a tough time finding a buyer even at a giveaway price for which the company is being offered for sale.
“The Boko Haram insurgency has affected the sale. No investor, foreign and even local are willing to stake their funds there because of the security challenges,” he said.
“Federal Government is willing to sell it at a cheaper price compared to how much other DisCos were sold but, even at that, no one wants to invest in a war torn zone,” he added.
During the 2013 privatisation round privatisation, investors had paid $1.4 billion to acquire the 11 DisCos.
After a joint evaluation of the electricity assets as stipulated in the Bureau of Public Enterprises, BPE, and the Ministry of Power under the President Goodluck Jonathan administration, a sum of $186m was agreed to be refunded to Integrated Energy.
However, $87.8m was eventually paid to the company as payoff on the premise that $186m was too high. The payoff included 20 percent of five years projected profit by the core investors.
After return of the company to the Federal Government, Mr. Baba Mustapha an Engineer, was appointed to run the DisCo in the capacity of an acting Managing Director. Before his appointment, he was a Deputy Director in the Ministry of Power.
Yola DisCo covers Adamawa, Borno, Taraba and Yobe states.
When SweetcrudeReports inquired whether Yola DisCo’s performance is better now that it is being operated by government compared to its counterparts being operated by private owners, our source replied with an emphatic “no”.
“Privatisation is the best thing that has ever happened to the power sector. So whenever people keep calling out the DisCos for inefficiency, I tell them to compare the kind of services Yola DisCo offers to those of the other DisCos”.
“Yes! Because what we have currently are perfect examples of Yola DisCo owned and run by government, versus the other 10 DisCos owned and run by private companies. So people can now compare their services and judge for themselves. Yola DisCo is doing far worse in terms of services and metering their customers. This vindicates the DisCos whenever people argue whether or not privatisation has paid off,” he said.
Following clamours from different quarters for government to reclaim the power sector, the Minister of Power, Works and Housing, Babatunde Fashola, has consistently said there is no going back on privatisation.
On the part of the DisCos, lack of access to foreign exchange, absence of cost reflective tariff, energy theft, low revenue collection, high running cost, inadequate gas supply, among others, are some of the challenges inhibiting effective performances, including meeting up with the metering plan.