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New owners to invest N288bn in power firms

By BusinessNews Staff on November 7, 2013

The Bureau of Public Enterprises has said that the electricity distribution companies handed over to private investors last Friday are required to invest about $1.8bn (about N288bn) as capital expenditure over the next five years to attain efficiency and meet the required capacity.

The Director-General, BPE, Mr. Benjamin Dikki, who gave this indication in Lagos on Tuesday, said the Discos would be required to spend a total of $357.7m this year alone.

He presented a paper entitled, ‘Power privatisation: Objectives, current status, prospects and challenges’, at the regional conference on financing infrastructure for sustainable development in West Africa.

Of the $357.7m, Dikki said the Abuja Disco would be expected to invest $36.6m; Benin, $24.3m; Enugu, $27.2m; Ibadan, $43.86m; Jos, $22.75m; Kaduna, $29.96m; and Kano, $30. 38m.

Others are the Eko Disco, $45.2m; Ikeja, $58.74m; Port Harcourt, $25.5m; and Yola, $13m.

Dikki added that the same financial outlay of $357.7m was expected to be injected into the distribution networks annually between now and 2017, which will amount to about $1.8bn.

“The investment to be made by the Discos must cover the commitments they have all made in the following areas: metering, health, safety and environmental practices, reduction in the number of customer interruptions due to network faults, new customer connections and network expansion, improving customer services and complaints handling procedures,” he said.

The Federal Government had handed over the power assets to private investors across the country on Friday in a widely acclaimed successful privatisation exercise.

The BPE DG, however, said one of the greatest challenges in any privatisation exercise was ensuring that necessary investments were made by the private sector.

He said, “Many countries experience disappointments when private sector partners fail to make investments as promised, whether for legitimate reasons or due to excuses. The power sector will require several billion of dollars over the next five years, and this money is needed in order to achieve the goals of the power reform programme.

“We have made the bidders contractually required to bring in this investment and the BPE and the Federal Government will be following up on this continuously.”

According to Dikki, the privatisation programme is anchored on the attainment of clearly defined goals and parameters.

He said the generation companies were expected to rump up the capacity of each outfit from the current dismal level to something higher over the next few years.

The BPE boss said the new owner of the Discos would be measured on the reduction of the aggregate technical and commercial losses, which they had indicated they would achieve.

Following the successful privatisation of the power assets, he said the nation would experience an increase in the quantum of power generated, adding that this would boost industrial and agricultural development in the county

“This is empirically illustrated in how the transaction has been structured to bring about improvements in generation capacity and efficiency in the retail end of the value chain (distribution),” Dikki added.

He recalled that the objectives of the Federal Government’s power reform was to reduce the cost of doing business in Nigeria so as to attract new investments through the provision of quality and dependable power supply for industrial, commercial and socio-domestic activities.

The BPE boss added that another significant objective of the reform was to improve the efficiency of the distribution, generation and transmission networks, which are currently in a comatose state.

All of this, according to him, can be achieved by creating an electricity market that is private sector-driven and ensuring massive investment across the value chain to improve efficiency by the private sector.

[Punch]

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