TO ensure regular and adequate supply of electricity to their citizens, state governments have been given the nod to collaborate with relevant distribution companies with a view to providing electricity.
In doing this, the governors, however, have to seek permission from relevant authorities.
The National Council on Privatisation (NCP), which gave this directive, said that they should be ready to make capital contribution which would be secured and on terms agreed with the distribution company.
The NCP said the assets thus acquired would become the property of the distribution company but would be wholly utilised within and for the benefit of the citizens of the relevant state.
The NCP said the state would receive compensation within the ambit of the extant tariff methodology. “Excess capital costs, if any, will be borne by the state government. Any investment by the state will not attract any interest payments by the distribution companies,” NCP said.
At the NCP first meeting for 2012, held on February 27, at the Presidential Villa, the council endorsed that the percentage of equity that state governments hold in a distribution company will be determined through independent valuation of actual investments by the respective states in the distribution network.
The council said the valuation would be determined by an independent agency jointly appointed by the state governments and the Nigerian Electricity Regulatory Commission (NERC.)
The NCP, given the economic un-viability of re-delineating the distribution companies along state boundaries, also approved that the present privatisation framework of 11 distribution companies created from the unbundling of the Power Holding Company of Nigeria (PHCN) should be maintained.
The NCP approved that 60 per cent of the shares of a distribution company be sold to core investors to allow state governments to participate in the bidding consortia but limit the overall federal and state government shares to 49 per cent.
Though the NCP approved that the federal and state governments would not play any role in the management of the privatised successor companies, it, however, endorsed that the workers’ allotment would not exceed a maximum of two per cent of the overall shares or 10 per cent of the Federal Government shares in each distribution company, whichever is lower.
It will be recalled that the NCP had at its meeting of October 31, 2011 deferred decisions on post-privatisation shareholding structure of distribution companies, pending when an agreement is reached with the state governments. NCP had also directed BPE and NERC to make presentations to the meeting of the National Economic Council (NEC) that followed the NCP meeting.
On the basis of the presentations and the attendant discussions, the Vice-President, Namadi Sambo, and chairman of NEC had constituted an ad hoc committee on power sector reform to further deliberate on the issues raised and make necessary recommendations to NEC.
Subsequently, the ad hoc committee chaired by the governor of Cross River State had met on January 25 and agreed on the issues in dispute which were eventually approved by NEC on January 26.
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