Govt set to give states 30% shares in Discos

bibing

Barring any change of plan, the National Council on Privatisation (NCP) will soon commence the process of offloading 30 per cent of its remaining 40 per cent shares in the nation’s 11 privatised electricity distribution companies (Discos) to states.

The development follows conclusion of the evaluation of investments made by states in the distribution system pre-privatisation by the Nigerian Electricity Regulatory Commission (NERC).

The Guardian learnt that the shares will be offloaded in line with the level of investments made by individual states in the utilities prior to privatisation. Only two states, Edo and Zamfara, failed to send in their investment status as at last week.

A source said the evaluation initially covered a longer period of investment, but on the directive of the NCP, it now covers from 2005 to the time of privatisation.
“Based on the extent of states’ investments, the NCP headed by the vice president will allocate shares to states. At that stage, the states can engage the new owners. Two things can happen: Those shares are jointly owned by both workers and the states, the ones that states have can now be used to engage the new owners in some kind of discussions, around maybe financing. The new owners can then ask them to cash back their stake. The states can also divest,” a source said.

The source added: “Ultimately, when the shares are allocated to states, the new owners can approach the states and have clarity about who their partners are, and new concomitant requirements would be made in terms of financing or corporate governance.”

The Guardian learnt that the evaluation conducted by NERC covers investments made through rural electrification-covering investments in the network, transformers and others–that were sold along assets to new owners of discos.
“States’ initial evaluation of investments was up to 1960s, but based on NCP directive, the evaluation covers from 2005,” the source said.

Final adjustment is said to be ongoing. The report is to be sent to NCP for use in shares allocations based on the level of investments of such states within the area covered by each discos.

Of the remaining government shares in the distribution companies, 30 percent is reserved for states.
Officials said the process was delayed by the governors, who were allegedly slow in collaborating with NERC in an ongoing verification exercise to determine the level of investments by their states so far.

Source: TheGuardian