Government Defends Stake in DisCos
After the privatisation of the Power Holding Company of Nigeria (PHCN) Plc assets in 2013, the Federal Government retained 40 per cent equity in the DisCos. Despite having the BPE to represent government’s interest in the companies, their performance remained below average.
Confronted with questions about the companies at the sideline of the forum, Okoh explained why government has not divested its stake in the firms despite the dire need of funds for revival.
His words: “Power is a strategic utility and the government at this time is not comfortable to totally divesting the interest in such essential and core utility. We had proposed that over time as we see the performance of the new private sector investors holding 60 per cent in the Discos and their commitment to providing this key public utility, then the government can systematically divest its interest.
“But, we have to be in a position that we are comfortable with how this key utility is being run, if not, there is the possibility that the government will be held hostage by the private sector people as far as that is concerned because a responsible government cannot wake up and not explain reasons for a blackout.”
Okoh said that the government was weighing several options including, looking into whether the balance sheets have been compromised.
The BPE chief suggested that analysing the situation to know “if the Discos balance sheets are compromised because they are not able to raise sufficient capital to improve the distribution network and provision of meters, then we have to look at the possibility of how to admit other investors who may have the capacity financially and other technical expertise to improve the distribution infrastructure.”
He noted that the interest of the citizenry lay in improved power supply at a reasonable cost and not in the power play between the government and the DisCos.
Despite the ailing condition of the assets and investors’ reluctance to inject more funds to rejuvenate them, the BPE boss said the government has not plan yet resell or re-privatise them.
He, however, suggested ways out of whatever challenges being faced by the investors.
Okoh said: “We cannot resell. It is not re-privatisation, it is already owned by the core investors, but if they make that strategic decision to admit additional investors, that will be fine.
“And, if they admit that liquidity is the challenge and the way they want to solve it is through equity and not debt, then they can admit investors, but if it is a debt solution, then we can approach the banks – the BoI (Bank of Industry) and others.”
He described privatisation as a way of raising money to make up for government shortages, instead of resorting to borrowing which should be a second option to resolving any financial gap that a corporate organisation or individual faces.
According to him, the same principle should apply to a country when it is in a shortfall in its liquidity to fund developmental activities. Okoh insisted that the natural fallback situation should be the assets that have not been yielding any benefit to the country as a whole and privatise these companies to raise the liquidity to fund the existing gap.
He said: “Borrowing or debts should be a sending options not your primary option because there is a cost to even borrowing which also comes back in terms of budgetary provisions that you have to service the debt.
“The principle of realising the value of assets that you have accumulated in the period of boom should drive a government policy in terms of bridging its cash fall in times of gloom.”
The success of the stakeholders’ forum will be determined with the implementation of the resolutions and recommendations made participants.
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