The Power Sector Recovery Programme (PSRP) recently developed by the federal government and the World Bank to revive Nigeria’s ailing power sector, has come up with an action plan for the sweeping restructuring of the 11 electricity distribution companies (Discos) that would enable a government to take over any Disco found to be insolvent.
Details of the action plan, gotten from a workshop organised by the Ministry of Power, Works and Housing to educate the media on the expected workings of the PSRP, indicated that the government is planning to restructure the Discos to meet their responsibilities in the country’s privatised electricity market after a thorough forensic review of their operations.
The workshop had in attendance the Minister of Power, Works, and Housing, Mr. Babatunde Fashola, the two ministers of state – Mr. Mustapha Shehuri and Mr. Suleiman Hassan – as well as heads of parastatals in the ministry, all of whom took time to explain the government’s plan in the PSRP.
The report further made recommendations for the Nigerian Electricity Regulatory Commission (NERC) to engage the Discos on revised business plans, which will be negotiated, finalized and implemented.
It also requires the government to “start the process of restructuring Discos that are found to require new capital injections”.
“This would involve NERC, BPE (Bureau of Public Enterprises), the Discos and other relevant parties. This may also involve the takeover of Discos with degraded financial positions,” said the PRSP report.
It, however, explained that before the takeover, technical competence reviews including forensic audits of all the Discos and the adequacy of their technical partners should be undertaken to ensure that they had not failed in their initial agreements with the government after the privatization exercise.
The document also revealed that there was an ongoing audit of the performance agreements and all direct agreements the government signed with operators in the sector to ensure that it was in compliance with its obligations.
It explained that there should also be measures to address the operational challenges of the Discos, which should include: “Develop case studies to determine the level of load rejections in the network, develop investment plans with clear impact analyses for increase in load across the network and in metering, and ensure regulatory measures are enforced.”