A SORT of stalemate dogs the power deals as the August 21 deadline set for preferred winners of assets of the Power Holding Company of Nigeria (PHCN) to pay the 75 per cent balance of the bid prices approaches.

The situation is compounded by the position of the prospective owners of the distribution companies (DISCOs) who are asking the government to show good faith and settle all liabilities before demanding balance payment from them.

They are worried that, once government collects balance from them, it would relax efforts to offset outstanding obligations; a situation, they fear, will put them at loggerheads with the workers.

In the past week, silence and palpable confusion seem to have been the case. Indeed, the new owners gave strong indications that the date would not be possible, urging government to consider a further shift. There is also growing concern over other implications of the delay for labour issues.

The Guardian learnt that the new owners have not been able to access the utilities for ‘shadow management’, as is it is usually done. It was learnt that the new owners have been denied access to the utilities by labour and the current management. As a result, they are unable to do ‘shadow management’

General Secretary of the National Union of Electricity Employees (NUEE), Joe Ajaero, had last April instructed members to prevent investors from commencing ‘shadow management’ until labour issues were resolved.

Shadow management means allowing investors to have access to their new asset to observe and understand the operations of the business they have invested.

There is also confusion over the balance payment date, as the Bureau for Public Enterprise (BPE) had earlier given September 21 as deadline. How the August 21 deadline was arrived is not clear but Ministry of Power and the investors seem to agree on the date. When both parties met last Tuesday, there was no contention over the date.

The BPE executed the Share Sale Agreement (SSA) with the preferred bidders of five PHCN successor generation companies and 10 DISCOs.

The bidders were subsequently given March 21, 2013 as deadline for the payment of the initial 25 per cent of the purchase consideration. All the bidders honoured the agreement and duly paid 25 per cent of the purchase consideration, amounting to $387,963,767.35, with the balance 75 per cent due on September 21.

Meanwhile, Ministry of Power sources said government might have rounded off payment of severance package and other entitlements benefits to workers. A source said the payment was completed on Friday.

Payment for distribution companies would commence Monday, The Guardian was told.

The entire payment system, sources said, would be rounded off within the next one or two weeks, much later than the contentious August 21.

Government is still considering if it should hold a stakeholders meeting before August 21. The new owners said they have not been notified about a meeting on the issue and that no new date has been communicated to them since last Tuesday when they met with Power Ministry officials.

Leader of the investors, Dr. Ransom Owan, said since government has not completed labour liabilities, the right thing to do is to shift the balance payment deadline.

He said: “We understand that severance payment for workers of the generation companies was completed on Friday and that of distribution companies would commence on Monday. The issue around shift of payment date is pending; government has not announced a date.

“If government is unable to do that, we are afraid this might portend future challenges for the process. There are speculations that the meeting would be held on today. We have not been contacted.”

Government, last week, assured that liabilities would not be passed on to the preferred bidders.

On Tuesday, the winners premised their inability to meet up with their payment obligations on the lingering labour crisis. Government had earlier expected the new owners to pay their balance early enough to enable it use the funds to offset the severance pays. But when this was not forthcoming, alternative sources had to be secured, according to government officials.

But the private investors who have rallied themselves under the auspices of the Roundtable of Distribution Companies (the Disco Roundtable) said that government should shift the deadline for payment to September 21, in an apparent move to give them time to gather their money. They seem to have latched onto the delay in workers payment to make their own demands, claiming that their lenders were unable to give them money until labour issues were completely resolved.

The Disco Roundtable is asking government to immediately release subsidy fund contained in the Multi Year Tariff Order (MYTO) model for each of the distribution companies to them.

They described the electricity sector as an infant industry worthy of nurturing and consider giving them tax holidays up to 5-10 years and urged for further assistance.

Owan asked government to conclude all labour issues and meet all conditions precedent before August 21; release subsidy fund contained in the Multi Year Tariff Order (MYTO) model for each of the distribution companies under new owners; fund the Transmission Company of Nigeria (TCN) adequately; issue extended 5-10 special tax holidays for electricity distribution akin to the telecom start up assistance to mitigate tariff increase and high cost; and extend the long stop date to September 21, 2013 to allow for the full satisfaction of all conditions precedent items by government.

Minister of Power, Prof Chinedu Nebo, who met with the team in Abuja, gave the assurance that government would soon convene a stakeholders’ meeting because of the nearness of the deadline dates.


http://ngrguardiannews.com/national-news/130305-confusion-over-payment-deadline-for-phcn-assets