Sincere 9gerian:

31 Dec 2013


Chineme Okafor


The Chairman of the Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi has stated that the initial challenges in the stabilisation of operations within Nigeria’s privatised electricity market were largely caused by the hostile reception of the new core investors by the market.

Speaking recently in Abuja on the progress of the sector, Amadi said the new owners of privatised successor generation and distribution companies did not enjoy a peaceful entry into the market as the handover of the companies took place amidst palpable hostilities from workers’ union that threatened the whole privatisation process.

According to him, the core investors did not have the time to access the operational status of the companies, stressing that “they came into the scene a little bit frightened and the mode of entry was acrimonious.”

“There were two kinds of problems in the sector: consumers and market anxiety. The second issue is actually about the owners themselves. They came into the market with talks about losses and the Multi Year Tariff Order (MYTO). With that kind of mind-set, there was twisty movement initially. But I think we did very well. Because of the supposed alignment between MYTO and the actual losses they have, we agreed that the full regime of MYTO might not operate in the interim period, and also with an interim rule that allows for settlement. At the end of the day, they unanimously approved the interim rule and one of the CEOs came to me and said, this is wonderful, for the first time,” Amadi said.

He continued: “The problem we had was also compounded by the mode of privatisation. The 'Fit and Proper' guideline also has to do with financial strength. So we expect them to acquire the assets with their shares corresponding to the amount of equity they have. But unfortunately, many of these assets were acquired with debt borrowing from Nigerian financial institutions, which may not be convenient for them. The money was paid in August and takeover in November, so apart from the agitations for interests, by the time they took over, the term for the money was due to service the loan and that put pressure on the investors. That is why all these run around and complaints that this market will collapse because of the mismatch. But some of them are picking up like Ikeja and Eko Discos and when we see the performance of private generation companies, they cannot be allowed to perform less because the whole idea of selling the network is to improve it."

“We can’t sell and expect it to go below average of government’s expectation, we expect it to go higher, but 2014 as the losses are being reduced and things get proper maybe we can expect it to quickly meet their commitment in terms of loss reduction,” Amadi added.

Speaking on the commission’s management of expectations in the market, Amadi said what NERC had done was to manage expectations of the investors and that of consumers.

“Don’t forget the unfinished labour issues also caused some anxieties. These were the major challenges that we faced and I think the worst is over. We discovered that only two billion out of N12 billion was paid, with about two Discos having paid their remittance. But today every Disco has paid its remittance. The Market Operator is looking at what they have paid because there could be dispute with prepaid and post-paid and they are trying to reconcile it. But the most important thing is that all the Discos have paid to avoid punishment,” he said.

Amadi disclosed that Yola Distribution Company, which had relied on bailout funds from the Market Operator to run its operations, had for the very first time in a long while, made payments to the Market Operator after deducting its operational expenses.

“For instance, Yola Disco has never remitted any money to this market, maybe since two years; they even requested N200 million before the handover to settle salaries every month. But the good news is that Yola remitted about N29 million for the first time because they have sorted themselves out, and they didn’t ask for any money again.

"So the issue of the financial validity of this market has been solved and we have been very pragmatic about it. This period was the most stressful for the new owners but we tried to make them calm. A market could be volatile and that could come from the market perception of uncertainties, of losses even before the losses occur. The losses may not even occur but by the principle of self-fulfilling prophecy, you weigh that loss into gain.

Sincere 9gerian:
But the leadership of the regulator is that you give people assurance, you keep the balls in the air let it not drop and you try to make people get to work and there is success,” he said.

http://www.thisdaylive.com/articles/amadi-phcn-core-investors-faced-acrimonious-entry-into-market/167627/

Sincere 9gerian: ^^ We hope so. For me, privatisation of PHCN was the biggest achievement of the govt in 2013. The industry is now on auto-pilot to greatness. I hope the same feat will be achieved for the refineries in spite of the protests by workers.

dareyking:
I jst belive the Op shuld be in is late 20's atleast buh I stand to be correct he doesn't display maturity at all since the day have been seeing is name on this forum....
I suspect you have Low self Esteem and you only resort to abuse and name calling to Cover your shame....
Grow up bro we goin into 2014 and be more matured in things you say....You are a role model to many includin the APC-e goons buh you are takin things too far....Haba na o go first like Jonathan...

Sincere 9gerian: It appears things are beginning to pick up. Hopefully, Tinubu and his APC dogs will leave our gas pipelines alone. Otherwise, thunder will decimate them if they go near our gas pipelines AGAIN.

Olugbenger:

Do you get an or.gasm by mentioning tinubu and APC in every thread?

the mode of entry was acrimonious.”

Sincere 9gerian:
Have you listened to Gej, Abati, maku, okupke, asari, pej speak about Nigeria? With the way he talks down on the country because of politics, I wont be surprised if he and other leaders of APC go out of their way to sabotage the country?