Federal government recently announced a major overhaul of the power distribution sector, aiming to restructure it along state lines.
This move comes as a response to the sector’s inherent inefficiencies and ineffectiveness, particularly in the operation of large-scale distribution companies (Discos).
While reaffirming its commitment to privatization, the government highlighted the necessity of reorganizing these entities into more efficient units to better fulfill their mandates.
In addition, the Federal Government has instructed the sale of Discos previously taken over by banks and the Assets Management Corporation of Nigeria (AMCON).
READ ALSO: Discrimination Against Nigerians: FCCPC Visits Chinese Supermarket
Currently, four Discos are under bank or AMCON management, including the Abuja Electricity Distribution Company under the United Bank of Africa (UBA), and the Benin, Kaduna, and Kano Electricity Distribution Companies under Fidelity Bank. The Ibadan Electricity Distribution Company is also under AMCON’s management due to financial challenges.
The government has pinpointed the lack of expertise and financial capacity among the initial private investors who acquired the Discos during the 2013 privatization as a major cause of inefficiencies in the sector. The Senate Committee on Power has echoed these concerns, criticizing the Discos for their subpar performance over the past decade and advocating for a comprehensive overhaul of the sector.
During discussions with the Senate Committee on Power, Minister of Power, Adebayo Adelabu, unveiled the government’s ongoing restructuring efforts for Nigeria’s 11 power distribution companies. He emphasized the need to realign the Discos along state lines to improve operational efficiency and proposed greater involvement of both federal and state governments in their oversight and management.
Furthermore, Adelabu outlined strategies to tackle the challenges faced by the power sector, including franchising unserved communities under the Discos and implementing stricter regulations to hold them accountable for their performance. He stressed the importance of technical expertise in managing the power industry and advocated for the expedited sale of Discos currently under AMCON and bank management to competent technical operators.
Senator Danjuma Goje expressed dissatisfaction with the Discos’ performance, highlighting their failure to contribute meaningfully to the sector beyond revenue collection. The Senate committee has authorized an investigative hearing on electricity tariff hikes to address consumer concerns.
Adelabu attributed the sector’s problems to the flawed privatization process, emphasizing the need for a more effective implementation to achieve its intended goals.
