The following article was published in The Guardian on September 11, 2013. To view the original article, click here.
EMS replaces PHCN, Interstate Electrics completes payment for Enugu Disco
“I CAN tell you that PHCN has almost ceased to exist now. Once the Transitional Electricity Market is declared in a few weeks time, that is the end of PHCN. Functionally, it has ceased to exist, but there must be a formal hand-over and once that takes place, they will finally cease to exist.”
In the above words, Minister of Power, Prof. Chinedu Nebo, formally inaugurated officials of the Electricity Management Services Limited (EMS) to take over all functions of the Power Holding Company of Nigeria (PHCN) that were left after it was unbundled into 18 successor companies.
Meanwhile, following the 21-day extension given to it to pay up the balance of $93 million for Enugu Electricity Distribution Company (DISCO) PLC, the preferred bidder, Interstate Electrics has finally concluded payment, sources at the National Council on Privatization (NCP) have said.
The Guardian learnt from a source privy to the meeting of the Technical Sub-Committee of the NCP Tuesday that it decided to hand the utility over to Interstate following a submission from the Bureau of Public Enterprises (BPE) that the firm had paid up the last tranches of the 75% pending payment.
The Federal Government through the Electricity Power Reform Act (EPSR) 2005 established PHCN (the initial holding company) to take over the National Electric Power Authority (NEPA), a wholly state-owned enterprise responsible for generation, transmission and distribution.
PHCN was subsequently unbundled into eighteen successor companies and officially meant to last only a few months before giving way.
In addition to other functions, the new body, Nebo said, would ensure strict technical enforcement of regulations of the Nigerian Electricity Regulatory Commission (NERC). The minister stressed how the new organization would provide the needed services to drive, support and sustain the emerging private sector-led electricity industry.
Nebo stressed that the post-challenges of the rapidly evolving private-led power industry were critical, hence the need for the EMS as a player to provide sector-wide services.
He said: “ The EMS is therefore, to take over the responsibilities of some non-core professional and subsidiary services of the defunct PHCN and its successor companies. Its mandate includes providing all needed ancillary and support services to the Nigerian Electricity Supply Industry (NESI). These services include engineering laboratory, meter test stations, central stores system, testing and certification of major electrical power equipment. Other activities will include providing the platform for standardization in the industry, arching the power sector data and information management.
He told the 10-man management team: “What this means is that your mandated functions is to respond to the need for sustenance and improvement of power supply and service delivery. At the same time, you must ensure quality and standardization of materials, equipment and machines used for electricity generation, transmission and distribution networks in Nigeria.
“We have come very close to the end of PHCN. Basically, almost all of the staff have been paid. What is left is independent retirement benefit that is going to be paid into their accounts. We are actually ready to hand over and many of the companies are willing to take over. The only thing is that the Minister needs to declare a transitional electricity market and that will be done when all the conditions precedent to that declaration have been put in place.
“NERC will advise me when to do that, and NERC is actually having a retreat now to make sure that everything is in place, and that all the details are fine-tuned before the declaration of the transitional electricity market. We need standardization, we need standard and EMS is going to enforce that, and whatever regulation NERC has put in place, EMS is going o make sure that technically, these regulations are being realized.”
He stressed that the management team had the task of repositioning EMS into a technically and financially efficient, sustainable and commercially viable company.
Members of the team are: Engr. Peter Ewesor (Managing Director/CEO), Engr. Tukur M. Gidado (Executive Director, Technical Services), Ms. Ikechi Clara Nwosu (Executive Director, Human Resources and Corporate Services), Ambassador Ayuba J. Ngbako (Executive Director, Commercial Services) and Funke Sam-Stanford (General Manager, Legal Services/Company Secretary).
Others are Oyinnemi Gbeworo (General Manager, Finance & Accounts), E.O. Adeniyi (GM, Procurement), Mr. Aneke Uche (GM, Public Affairs), Tijani Baba (GM, Audit) and Engr. Okwudili Ezegwa (GM, Meter Test Station),
On its part, Interstate Electrics has restated its plans to boost efficiency for effective service delivery in the distribution of power in South Eastern Nigeria. The pledge followed its successful payment of the balance of $94million required for the takeover of the DISCO.
The company is jointly promoted by the multi-billion dollar Chrome Consortium Energy Nigeria Limited. Power House International and the highly rated Metropolitan Electricity Authority (MEA) of Thailand.
Apart from MEA, its other partners are, and Powerhouse International Limited. They jointly parade a team of electricity infrastructure engineers, owners/operators of electricity power distribution companies, upstream and downstream oil operators and empowerment partners, with a collective global experience of over 80 years.
One of the consortium’s technical partners, MEA, has over 50 years experience and is responsible for the distribution and sale of electricity to users in Bangkok and metropolitan vicinities, including Nonthaburi and Samutprakarn provinces. MEA’s distribution area covers 3,195 square kilometers divided into 14 districts with a population of about eight million and energy sales of 44,714 GWH of electricity, which is consistent with the structure and capability the Enugu Distribution company requires.
“We would begin operations with unique private sector model that has high efficiency and corporate governance standards that would set the pace for electricity distribution in Nigeria,” Chairman of Power House International, Mr Kester Enwereonu, said.
Accoding to him, MEA has high efficiency and corporate governance standards and a model that competes effectively with private sector models worldwide. He stressed that the consortium would improve the company’s network to deliver excellent service to its customers, using their collective financial muscles and high expertise. MEA reportedly distributes electricity in the Thai capital, Bangkok and environs and is reputed to be one of the most efficient developing world power distribution companies with record technical and commercial losses of below five percent over the past eight years.
The DISCOs are the Abuja Electricity Distribution Company Plc; Benin Electricity Distribution Company Plc; Enugu Electricity Distribution Company Plc and the Eko Electricity Distribution Company Plc. Others are the Ibadan Electricity Distribution Company Plc; Ikeja Electricity Distribution Company Plc; Jos Electricity Distribution Company Plc; Kaduna Electricity Distribution Company Plc; Kano Electricity Distribution Company Plc; Port Harcourt Electricity Distribution Company Plc; and Yola Electricity Distribution Company Plc.
Official and private sector sources said at that with the final payment for the Enugu DISCO, “government is now satisfied with the progress so far made”.
Chairman of BRESSON A.S. Energy, Mr. Gbenga affirmed that the “milestones so far achieved by the federal government in reforming the power sector, especially as reflected in the successful privatisation of the electricity distribution (DISCOS) and generating companies (GENCOS) are laudable.”
Meanwhile, the confidence of government in the ability of Interstate Electrics to efficiently manage the Enugu company is said have lately grown following revelations that Interstates is the only firm that has thus far attracted offshore financing.
The offshore financing, sources said, came from banks whose operations are guided by “global best practices and strict governance and monetary policies”, as a reputable multi-national financing organisations, a BPE source said yesterday.
A source remarked: “And for the bank that strictly operates in accordance with global best practices to have granted the loan, suggest that thorough checks would have been carried out on the credibility and capability of Chrome Group of Companies of which Interstate is a subsidiary.”
A BPE source added that a recent visit by the agency’s officials to one of Interstate MEA was satisfactory, as doubts on their electricity distribution prowess were erased. Drawing from their foreign partnership experience therefore, Interstate is said to have developed the best structure thus far.
The consortium incorporated as a vehicle for the purpose of acquiring and operating DISCOs in Nigeria emerged the preferred bidder for the Enugu DISCO after a rigorous bidding process in the sale of PHCN in 2012. It has an Aggregate Technical, Commercial and Collection (ATC & C) loss reduction proposal of 20.83%, which is far above that of other competitors in the bidding process.