States and communities hosting the 11 distribution companies unbundled from the defunct Power Holding Company of Nigeria (PHCN) will share the remaining 40 per cent stakes in the assets, as part of the efforts to compensate state governments that made huge investments in the electricity distribution infrastructure before the privatisation of the power sector.
The private sector recently acquired 60 per cent stakes in 10 of the 11 distribution companies, leaving the ownership of the remaining 40 per cent stakes in the hands of the federal government.
But the Director General, Bureau of Public Enterprises (BPE), Mr. Benjamin Dikki, told THISDAY that the federal government would allocate part of the remaining 40 per cent stakes to states, host communities and workers in the power sector.
Dikki further stated that the federal government, through the National Council on Privatisation (NCP) had directed the Nigerian Electricity Regulatory Commission (NERC) to value the investments made by each state government in power infrastructure so that they would be given shares in the companies.
“That is why only 60 per cent has been sold to the private investors in the distribution companies. The remaining 40 per cent is still left. Part of that 40 per cent will be used to resolve the investments made by the state governments. Part of it will be used for staff. Part of it is also reserved for host communities. So, as soon as NERC completes evaluation of the assets of each state, evaluation will be done and appropriate shares will be allocated to the state governments to the extent of their investments. The other aspect is now left in the hands of the private sector,” he said.
Dikki stated that the federal government acknowledged that many state governments had made investments in power infrastructure.
According to him, some state governments have extended electricity supply from areas that have power to areas that do not have power.
Dikki said some states had improved the distribution networks and even built completely new ones.
“So, NCP took cognisance of that and there is no way it can ignore the investment made by the state governments since government has liberalised the sector. Previously, if you generated your own power under the National Electric Power Authority (NEPA Act), you put it through the meter; you have to pay NEPA. If you bought cables or poles in order to take power to own area, it belonged to NEPA,” he added.
Dikki said with the abrogation of the NEPA Act and the introduction of the Electric Power Sector Reform (EPSR) Act of 2005, the new law did not give PHCN the power to expropriate assets that did not belong to the organisation.
“So, the state governments have made investments and that must be taken cognisance of,” he added.
The assets, which transactions have been concluded include, Ikeja and Eko Distribution Companies in Lagos; Ibadan Electricity Distribution Company; Abuja Distribution Company; Kano Distribution Company; Enugu Distribution Company; Jos Distribution Company; Benin Distribution Company; Port Harcourt Distribution Company and Yola Distribution Company.
However, the deal for the sale of 60per cent stake in Kaduna Distribution Company is yet to be concluded.