Power distribution companies require $4.3bn to recapitalize in order to effectively invest in their networks nationwide and improve electricity supply, according to a study conducted by the Transmission Company of Nigeria. TCN also stated that the Federal Government, which owns 40 per cent stake in each of the 11 power Discos in the country, should provide 40 per cent of the $4.3bn, which is about $1.7bn. This, according to the study, will help correct some of the mistakes that were made when the power sector was privatized and handed over to private investors in November 2013.
Explaining some of the findings of the recent study in Abuja on Monday, TCN’s Managing Director, Usman Mohammed, said, “To correct the wrong in power distribution, we have to recapitalize the Discos. To recapitalize the Discos, the investors have to bring new money and that means they have to bring new partners. And what we are saying is that the government cannot be passive anymore. “The intention was that the government would own 40 per cent in the firms, but it will have a nominal interest and that is why it is represented by one director, while the 60 per cent that is owned by the Discos or the private sector in each of the firms will be represented on the board by six directors.”
He added, “But we are now saying that it should not be so. Government ownership should be represented by four directors proportionate to the investment. And we are saying the government should bring its own 40 per cent capital. We have simulated the grid to determine the investment requirement of the Discos and we have come with $4.3bn. “When this is divided based on our study, you are going to get about $500m per Disco and we believe our study is credible. So, we are saying the government should bring its own 40 per cent of $4.3bn, which is about $1.7bn. We also said that this money can be raised.”