FG’s power sector debt hits N1tr as new owners take over PHCN

The Federal Government yesterday handed over
the physical assets of the Power Holding
Company of Nigeria (PHCN) to the 14
successor companies.
Power Minister Chinedu Nebo told reporters in
Abuja that the PHCN has now ceased to exist
but the debt which government incurred and
their assets have been transferred to the
Nigeria Electricity Liability Management
Company (NELMCO).
"Government has no business doing business.
Because government was doing business,
NELMCO now has between N600 billion to N1
trillion debt that needs to be settled. So, some
of these assets you are thinking will be
stripped will not be stripped. They have been
submitted to NELMCO," he said.
The minister said the Nigeria Electricity
Regulatory Commission (NERC) would soon roll
out rules for the interim operation of the
firms before the activation of the Electricity
Transition Market.
The minister noted that there would be post-
handover monitoring by the Federal Ministry
of Power, NERC and the Bureau for Public
Enterprises (BPE).
He said: "For today's event, we must hand over
physically five generation companies and 10
distribution companies to the new owners. The
handover automatically gives the new owners
authority to take over and manage the
companies in line with already established
rules and guidelines by the Bureau of Public
Enterprises and Nigerian Electricity Regulatory
Commission.
"Announcement and activation of the interim
market rules by NERC, the regulator, will very
shortly announce to us what the interim rules
for the market should be. Next is the
declaration of the Electricity Transition Market
by the minister, which will be made on advice
by NERC."
He explained that the fears of the challenges in
the transmission sub-sector of the industry
have been overtaken with the Federal
Government intervention in excess of $3
billion for strengthening the transmission
network.
According to Nebo, Nigeria hopes to rake in 4
per cent of its Gross Domestic Product (GDP)
from the power sector when the potential is
fully realised.
He announced that N360 billion had been
disbursed to the staff of the PHCN while N30
billion was in the pipeline.
Vice President Namadi Sambo, in separate
messages to the handing over ceremonies
across the country, said sanction awaits any of
the 14 Power Holding Company of Nigeria
(PHCN) successor companies that fails to
deliver or violates the rules enshrined in the
Power Sector Reforms 2005.
The companies are Amperion Power Co. Ltd
(Geregu), Transcorp/Woodrock (Ughelli),
Integrated Energy Company (Ibadan), NEDC/
KEPCO (Ikeja), Vigeo Power Ltd. (Benin), Aura
Energy Ltd. (Jos), Integrated Energy Company
(Yola), Mainstream Energy Ltd. (Kainji), West
Power & Gas (Eko Kann Consortium (Abuja),
4Power Consortium (Port Harcourt), and
Sahelian Power SPV Ltd
The Nigerian Electricity Regulatory Commission
(NERC) and the Bureau of Public Enterprises
(BPE), he said, would not hesitate to sanction
any core investor that violated the rules and
regulations of the sale.
He said the two agencies had been mandated
to monitor the operations of the 14 unbundled
PHCN companies.
"Let me state clearly there that both the
Nigerian Electricity Regulatory Commission and
BPE will continually monitor the operations of
the successor companies and would not
hesitate to sanction any core investor that
does not deliver on the performance
agreement that was executed with the
government.''
He said the companies had been tasked to
ensure consistent supply of electricity to
improve socio economic development.
He acknowledged the challenges facing the
power sector in Nigeria but spoke of
government's commitment to the creation of
an enabling environment to incentivize private
sector investors.
The Vice President charged the successor
companies to transform into world class
entities in terms of quality of service delivery,
social corporate responsibility, customer's
satisfaction and profitability.
He said there would have been a monopoly if
the power generation companies remained as a
single entity.
At the handing over of the Abuja Electricity
Distribution Company (AEDC) to the new
investors- KANN Utility Consortium (Nig)
Limited, its Chief Executive Officer (CEO), Alhaji
Shehu Malami, told electricity customers
within the territory to be patient with the new
company because the private sector has no
magic wand.
He said that following the years of lack of
investment in the sector, the private sector
should not be expected to change the firm to
meet international standard overnight.