The Chairman of Heirs Holding and United Bank for Africa (UBA) Mr. Tony Elumelu has urged the federal government to reconsider the ownership structure of Electricity Distribution Companies (DisCos) with a view to taking over controlling shares of the firms.
This call was made on the sidelines of the ongoing 23rd Nigerian Economic Summit holding in Abuja.
Mr. Elumelu noted that “in as much as some existing investors might like the idea, the federal government could not continue to allow the Discos hold the nation down with inefficient power distribution.”
His solution to the epileptic power supply in the country is the “recapitalization of the Discos and then increase its stake from the current 49 per cent to 51 per cent and sell the controlling stakes to new investors, as the current operators have become obstacles to the realization of the nation’s power capacity goal.”
According to him, “our people are very enterprising and they want to succeed. But they need the right environment to succeed. I appreciate what the government is doing for electricity but we need to do more. I empathize with the government on its efforts in that sector. But Mr. Vice President, I think there is a lot we can do to correct the ownership of that sector without affecting the property rights of the investors. That sector must be dealt with it for us to have power to do business.”
He added that “government, with over N700 billion provided. In a few months’ time, that will be exhausted. The market should be able to sustain itself. This is what I think. The government has to take actions that will ensure the adequate funding of the operations of the Discos.
“Mr. V.P, I know some of the operators in this sector will not like this. This is my idea. We cannot reverse what has been done. But we can creatively address what has been done.
“If government to my understanding has 49 per cent of the Discos and the private companies have 51. Can we ask these companies to recapitalize? Let the FG recapitalize. They will not be able to put in more capital. So the federal government through the Federal Ministry of Finance Incorporated should increase federal government holding.”
“Then post recapitalization, the federal government sells its controlling shares to new investors who have the financial wherewithal to properly finance the operations of the Discos. This is important because in a situation where current operators don’t have the funds to run them, if the federal government wants to sell its shares in the discos, investors who should have brought in their capital won’t come in if the controlling shares continue to remain with the current operators.
“When this is done, then we can have new investors who can come in and run the Discos efficiently. It doesn’t matter where they come from but they should be investors who have the financial capacity and tested expertise to manage the distribution segment of the sector in such a way that they can deliver effective service.”