Emerging Problems in the Power Sector, Investors in Yola Disco Demand Refund
It is certainly not good times in the power sector. There are complains everywhere about poor power supply and now the investors who bought over Yola Disco to provide power in the four states in the Northeast has demanded for a refund from the federal government.
Experts in the power industry see the request as critical and could portend ill for the much trumpeted successes of the power asset privatization executed by the outgoing administration of President Goodluck Jonathan.
According to the report published by Daily Trust, The Integrated Energy Distribution and Marketing Company (IEDM), core investor in the Yola Electricity Distribution Company has applied to the federal government through the Bureau for Public Enterprise, BPE, for a refund of its invested funds. The company has invoked the force majeure clause in the contract agreement citing the activities of the Boko Haram militants as having collapsed its businesses in Borno, Yobe, Adamawa and Taraba States.
The Bureau of Public Enterprises is said to have recommended the payment of $146.8 million (about N29.2 billion) to Integrated Energy Distribution and Marketing Company (IEDM) in a share buy-back deal to the National Council on Privatization, NCP, for approval. BPE is also recommending that a management team be procured to carry on the operations of the Disco by the ministry of power.
Integrated Energy had complained that out of the 13 Business Units (BUs), only three were able to operate efficiently at the height of the Boko Haram crisis and that a total of 60, 282 customers had been cut off the network which severely impacted on revenue collection resulting to negative cash flow for 11 months.
Some energy experts however feel that Integrated Energy’s request to pull out and be refunded should not be granted and that if is to be granted at all, it should be with a severe cost to the investor. They advised the in-coming government to examine the entire power asset privatization with a view to getting the investors to do what they promised in the agreements signed with the federal government agencies involved in the privatization and that the regulation should be strengthened, made firm and able to wield the big stick and penalize operators in default of agreements.