Power sector shakeup: Govt to offload DisCos under AMCON, banks

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The Nigerian power sector is set for a significant shakeup as the Federal Government (FG) announced plans to sell off five electricity Distribution Companies (DisCos) currently managed by the Asset Management Corporation of Nigeria (AMCON) and banks within the next three months.

This move comes amidst ongoing concerns about the performance of the DisCos, and the government’s frustration with their lack of progress under AMCON and bank control.

The Minister of Power, Adebayo Adelabu, announced the decision during a meeting with the Senate Committee on Power. He expressed dissatisfaction with the DisCos’ performance under AMCON, stating, “We can no longer afford AMCON to run our DisCos… This is a technical industry and it must be run by technical experts.” The Minister emphasized the need for new ownership with a focus on technical expertise to improve the efficiency of the DisCos.

The five DisCos slated for sale include Abuja, Kaduna, Kano, Benin, and Ibadan. These DisCos have faced criticism for issues such as inadequate power distribution, high energy losses, and estimated billing practices. The government hopes that selling them to reputable technical operators will lead to improvements in these areas.

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“On distribution, very soon you will see that tough decisions will be taken on the DisCos. They are the last lap of the sector. If they don’t perform, the entire sector is not performing,” Adebayo said.

”The entire ministry is not performing. We have put pressure on NERC, which is their regulator to make sure they raise the bar on regulation activities.

”If they have to withdraw licenses for non-performance, why not? If they have to change the board of management, why not?

“And all the DisCos that are still under AMCON and Banks, within the next three months, must be sold to technical power operators with good reputations in utility management.

“We can no longer afford AMCON to run our DisCos. We can no longer afford the banks to run our DisCos. This is a technical industry and it must be run by technical experts.”

However, several questions surround the planned sale. Identifying qualified buyers within such a short timeframe will be a challenge. Additionally, concerns exist regarding the potential impact on ongoing electricity tariffs and consumer protection measures. The Nigerian Electricity Regulatory Commission (NERC) will play a crucial role in ensuring a transparent and competitive sale process.

Analysts are divided on the potential outcomes. Some believe that selling the DisCos to private technical operators could lead to a much-needed improvement in service delivery. Others express caution, highlighting the need for robust regulatory oversight to prevent exploitation by new owners. The success of this initiative will depend on the government’s ability to select competent buyers, ensure a fair sale process, and prioritize consumer protection.

The move to sell these DisCos signifies the government’s growing impatience with the status quo in the power sector. While the potential benefits are significant, careful planning and execution will be crucial to avoid unintended consequences. The coming months will be critical as the government navigates the sale process and Nigerians wait to see if this move will finally deliver a more reliable and efficient power supply.