Federal Government Orders Sale of DisCos Amid Unbundling Process
Written by Deborah Oyinloye on April 23, 2024
In a significant move towards enhancing efficiency in the power sector, the Federal Government has initiated the unbundling process of 11 electricity distribution companies (DisCos). This decision, announced by Nigeria’s Minister of Power, Adebayo Adelabu, during a meeting with the Senate Committee on Power, aims to streamline the operations of DisCos for improved performance.
Adelabu emphasized that the privatization of the DisCos would not be reversed but instead, they would be restructured into more efficient entities along state lines to enhance service delivery. Notably, the initiative excludes teachers, medical personnel, and other essential service providers.
Highlighting the rationale behind the decision, Adelabu stated, “Some of the Discos are too big for efficiency. They are too big for effectiveness.” He further added, “We have left it for the private sector operators for too long and they have messed it up. So the government must come back to take over its own right in the DisCos.”
Additionally, the Federal Government has mandated the sale of DisCos that have been taken over by banks and the Assets Management Corporation of Nigeria (AMCON) due to their inability to repay loans. Currently, four DisCos are under the management of financial institutions, including the Abuja Electricity Distribution Company managed by the United Bank of Africa (UBA) and others managed by Fidelity Bank and AMCON.
The decision to sell these DisCos underscores the government’s commitment to revamping the power sector and ensuring effective service delivery. Adelabu emphasized the need for technical expertise in managing DisCos, highlighting the government’s resolve to ensure that competent entities take charge of these critical utilities.
Moreover, addressing the metering gap in the power sector, Adelabu revealed that efforts to bridge the gap had been hindered by past failures. He disclosed, “In 2003, the metering gap was less than four million meters, and the Federal Government gave out $200 million to acquire three million smart meters… no single meter was acquired by this company.”
The minister reiterated the government’s commitment to closing the metering gap and achieving a target of 6,000MW of power before the end of the year. He also called for the payment of outstanding debts to gas companies and power generation firms to ensure the sustainability of power supply.
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Author: Deborah Oyinloye
With an interest in media, Deborah aims to impart the lives of people positively.
