Fidelity Bank and the Assets Management Corporation of Nigeria (AMCON) have taken over the control of Kaduna, Benin, Kano and Ibadan Distribution Companies (DisCos) just as the federal government has restructured Port Harcourt DisCo to halt its crash.
Following the takeover, Fidelity Bank informed the Nigerian Electricity Regulatory Commission (NERC) and the Bureau of Public Enterprises (BPE) that it had activated the call on the collateralised shares of Kano, Benin and Kaduna DisCos with their acquisition loans in 2013, drawn from Fidelity and AFREXIM Bank.
Due to the payment defaults, the bank said it initiated action to take over the Boards of these DisCos and exercise the rights on the shares.
The authorities swiftly recognised the board and replaced Managing Directors of the DisCos as well as Ibadan and Port Harcourt DisCos too.
UBA had in December taken control of Abuja DisCo over default in the 2013 privatisation acquisition loan payment.
The fresh actions are coming just five days into a new electricity market regime based on contractual obligations, activated by NERC on July 1st, to ensure 5,000 megawatts of electricity daily supply while sanctioning operators for default. Although, the target has not been met barely a week after, the actions are indicators of sanctions for the perennially backward DisCos, industry experts observed.
According to BPE and NERC in the latest announcement, Fidelity Bank’s action is a contractual and commercial intervention and is between the Core Investors in the DisCos and the lender. BPE is involved because of the 40% shareholding of government in the DisCos.
Fidelity Bank also presented the new board members to the regulator to include three persons each in the three DisCos.
Kano DisCo has Hassan Tukur (Chairman), Nelson Ahaneku and Rabiu Suleiman as members; Benin DisCo has KC Akuma (Chairman), Adeola ljose and Charles Onwera as members while Kaduna DisCo has Abbas Jega (Chairman), Ameenu Abubakar and Marlene Ngoyi as members.
For the government’s 40% stake, BPE said it nominated Bashir Gwandu (Kano), Yomi Adeyemi (Benin) and Umar Abdullahi (Kaduna) as independent directors for the transition period.
Dismissing fears of a total acquisition of the DisCos by the bank, the authorities said, “We are engaging with the Central Bank of Nigeria (banks’ regulator) to ensure that Fidelity Bank does not hold the DisCos shares in perpetuity. It is envisaged that the majority interest in the entities would be sold to capable private sector investors willing and able to re-capitalize and manage the entities efficiently.”
NERC, BPE replaces MDs, boards in 5 DisCos
Triggered by the Fidelity Bank action, NERC and BPE in an emergency meeting, activated the Business Continuity Process and appointed interim Managing Directors in the affected DisCos.
Kano DisCo got Ahmad Dangana to replace Jamil Gwamna; Benin DisCo’s Funke Osibodu was replaced with Henry Ajagbawa of Port Harcourt DisCo, while Kaduna DisCo’s Yusuf Usman Yahaya, appointed in May, was retained.
Also, with the takeover of Ibadan DisCo by AMCON, the BPE got NERC’s nod to appoint Kingsley Achife as the interim MD while AMCON is the board for the DisCo with Oluwaseyi Akinwale and Alex Okoh, the BPE Director General representing Government’s shares.
And for Port Harcourt DisCo, the authorities re-structured the management and board to forestall imminent insolvency. They appointed Iboroma Akpana as the new board chairman while Emmanuel Okotete, Eyo Ekpo, Ismaila Shuaibu and the DG of BPE formed the interim Board.
The MD, Henry Ajagbawa was also replaced by Benson Uwheru, and to stabilise the DisCo, Government will draw from the Nigerian Electricity Market Stabilization Facility to support PHEDC for improved services.