FG Unveils Plans to Unbundle Power Distribution Companies

By Ugbede James

In a bid to address long-standing inefficiencies and ineffectiveness in Nigeria’s power sector, the Federal Government has announced plans to unbundle power distribution companies (Discos) along state lines.

This decision, revealed by the Minister of Power, Adebayo Adelabu, comes as a response to the challenges posed by the large sizes of these companies, which often hinder operational efficiency.

Speaking during a meeting with the Senate Committee on Power led by Chairman Senator Eyinnaya Abaribe, Minister Adelabu emphasized that the restructuring of Nigeria’s 11 power distribution companies, initiated by the administration, aims to maintain the privatization of the firms while enhancing their effectiveness through the creation of more manageable structures.

One notable aspect of the announcement is the government’s directive to sell Discos that have been taken over by banks and the Assets Management Corporation of Nigeria (AMCON) due to their inability to repay loans.

Among these companies are Abuja Electricity Distribution Company (AEDC), Benin Electricity Distribution Company (BEDC), Kaduna Electricity Distribution Company (KEDC), and Kano Electricity Distribution Company, which are currently under the management of financial institutions such as UBA and Fidelity Bank.

Furthermore, the Minister disclosed plans to involve both federal and state governments in the management of the Discos, as the government still holds a 40% stake in these firms. This move underscores a shift towards increased government oversight and intervention in the power sector, particularly in light of the perceived failures of private sector operators.

Additionally, Adelabu outlined intentions to franchise unserved communities under the Discos, signaling a broader strategy to improve electricity access across the country.

By introducing regulations around franchising, the government aims to encourage investment in underserved areas, thereby expanding electricity coverage and enhancing overall service delivery.

The proposed unbundling of Discos along state lines and the government’s commitment to increasing its involvement in the power sector reflect a significant development in Nigeria’s efforts to address longstanding challenges in the provision of electricity.

As stakeholders await further details on the implementation of these plans, the move signals a potential transformation in the management and operation of the power sector in Nigeria.