The federal government says it will not put in more money in the power plants sold to private investors under the privatization programme in the country.
The Vice President, Yemi Osinbajo, said rather than give fresh funding, current owners of those companies who have no capacity to finance their operations should transfer their equity to fresh investors to help realise that objective.
During the plenary session of the ongoing Nigerian Economic Summit, NES 23, in Abuja , the Chairman, Transcorp Ughelli Power Limited, Tony Elumelu, had urged the Federal Government to reconsider refinancing the Electricity Distribution Companies, DISCos, by acquiring fresh shares of the firms.
Mr. Elumelu, who is also the Chairman of Heirs Holding and United Bank for Africa, UBA, said this would be a way of checking the current situation where operators of these power plants are holding the government to ransom with endless demands.
“I know some of the current investors in the power plants may not like the idea. But, the federal government could not continue to allow the DISCOs hold the nation down with inefficient power distribution,” Mr. Elumelu said.
“My solution to the epileptic power supply in the country is the recapitalisation of the DISCOs, by government increasing its stake from the current 49 per cent to 51 per cent, before selling the controlling stakes to new investors, as the current operators have become obstacles to the realisation of the nation’s power capacity goal,” he explained.
But, the Vice President who expressed surprise at Mr. Elumelu’s proposal, then sought further clarification on whether he was suggesting that government should finance privatised businesses.
He was contributing to the discussion on efforts by government and the private sector to collaborate to create the environment for more investments, through adequate electricity supply, towards sustainable economic growth.
In his response, Mr. Elumelu explained further.
“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 for us to have power to do business,” he said.
“Government, with over N700 billion provided, in a few months’ time, that will be exhausted. The market should be able to sustain itself. 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.
“What I mean is that government has 49 per cent of the DISCOs and the private companies have 51. Can we ask these companies to recapitalise? Let the Federal government recapitalise. 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 recapitalisation, 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.”