Ossiomo Power: Restructuring of Benin Disco Over Debts Vindicated Governor Obaseki
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Ossiomo Power: Restructuring of Benin Disco Over Debts Vindicated Governor Obaseki



By Inwalomhe Donald


The restructuring of 5 electricity distribution companies (DisCos) has vindicated Governor Obaseki investment in Ossiomo power plant. The Federal Government has announced the restructuring and take-over of 5 electricity distribution companies (DisCos) across the country by some banks in a move that might not be unconnected with their inability to meet up with the repayment of its debt obligations. This follows the activation of the call on the collateralized shares of Kano, Benin and Kaduna DisCos by Fidelity Bank with the initiation of action to take-over the boards of these DisCos and exercise rights on the shares.

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.

Earlier this year, NERC had called for a restructuring of these distressed DisCos, including Jos, Benin, Kaduna and Kano, where the owners were also management officials. 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.

There is need for President Buhari to adopt Governor Obaseki’s power model of power generation and distribution in Edo State. There is competition between Ossiomo and BEDC in Edo State. There is alternative electricity in Edo State today. Nigeria needs this model to solve the electricity challenge.

In June 2017, Governor Godwin Obaseki announced to the world that in six month’s time, his administration would provide uninterrupted power supply to Bénin City and environs. According to his plans, government establishments on Sapele Road axis, including Government House, Secretariat, Court Complex, Central hospital, House of Assembly and also the Oba of Bénin Palace, will enjoy the 24 hours power supply.

Obaseki was quite assured that he would deliver on his promise in record time. He gave the assurance after he entered a power purchase agreement with Ossiomo Power and Infrastructure to bulk purchase the five megawatts the firm planned to generate from its 50 megawatts plant at Ologbo in Ikpoba-Okha local government area which BEDC has frustrated. The megawatts was expected to be transmitted on a new 35-kilometre double circuit 33Kva line to deliver 24/7 uninterrupted power.

The electricity market in Edo State is taking a turn for the better as increased competition among players has created options for reliable power supply to residents, who credit the Edo State Governor, Mr. Godwin Obaseki, for opening up the state for investment that has now improved their living standards.

Checks in the Benin metropolis have revealed that the two major power distribution companies in the state, Benin Electricity Power Distribution Company (BEDC) and Ossiomo Power Company are in a fierce battle for the customers with the competition assuring better power options to residents.

It was discovered that with the improvement of distribution infrastructure by Ossiomo Power in select areas in the Benin metropolis, residents are opting for the company’s power solution with the supply averaging 22-24hrs/day. “The industrial areas are even better served because they need electricity to keep the machines running, which is not what you get everywhere in Nigeria.

“It is great that BEDC, which used to dominate the market, now has a competitor. With this, we have a more stable market situation as people are now provided with options when considering power solutions in their homes or industries. Those who will benefit the most are industries, hotels, and others in the hospitality sector.”

Governor Obaseki had disclosed that Edo State has developed plans to help overcome the challenges of power distribution to industries, residential buildings and other users. BEDC has misunderstood this and trying to frustrate the effort of the governor in providing electricity to the people of Edo State. This includes building areas of use, that is, developing industrial parks, housing estates and other clusters that can be directly connected to generating plants.” He said, “When these plans are fully achieved, the state would have steady power supply to support businesses and other users. With time, Benin City and other towns in the state will be better planned and segregated so that industrial use of power can be separated from domestic use.”

“When this is done, the structural challenges along the chain of generation and distribution will then be reorganised and steady power supply will then be guaranteed,” he said. He explained that steady power supply cannot be achieved overnight until the structural impediments are addressed, noting, “Even if the issue of generation of power is addressed, efforts must be made to address issues mitigating distribution and transmission.”

Obaseki is setting new boundaries for power generation in Edo State which Benin Electricity DisCo (“BEDC” or “Benin Disco”) which is one of the successor distribution companies (DisCos) created following the unbundling and privatization of the state-owned Power Utility, Power Holding Company of Nigeria Plc highly misunderstood. BEDC misunderstood Obaseki who has introduced systems approach to quantifying the value of power generation and energy storage technologies in future electricity networks. A new approach that required to determine a technology’s value to the power systems of the 21st century. The centrepiece of the system value (SV) concept is a whole electricity systems model on a national scale, which simultaneously determines the ideal power system design and unit-wise operational strategy.

BEDC since inception has not added any value to the Infrastructure it inherited which explains the poor and deteriorated state of the power infrastructure in this part of the country. “The BEDC personnel on the field are unprofessional in their conduct and openly engage the services of military personnel to intimidate and brutalise customers. Nigerians want to have improved access to power supply and industries want to have electricity to scale up production.”

Obaseki had accused the BEDC of writing petitions against the deal sealed for the purchase of five megawatts of electricity to light up government offices in Benin City. The governor, who said the petitions have hindered the success of the purchase agreement, decried the poor supply of electricity to the state, the company’s resolve not to supply pre-paid meters to electricity consumers and its culture of over-billing its clients.
According to the governor, “195 communities have never seen electricity as BEDC is not ready to extend electricity to these communities. 128 communities have issues of collapse of infrastructure which BEDC is not prepared to fix. 219 transformers purchased by the state government and the former Power Holding Company of Nigeria (PHCN) as replacements for faulty transformers are yet to be installed by BEDC.
“The people are over-billed with the estimated billing system of BEDC. We lost a student due to the negligence of BEDC, for refusing to fix a pole that was knocked down after receiving money to fix it. I have instructed the Attorney General of Edo State to file charges of criminal negligence against the senior management of BEDC,” Obaseki said.

The electricity sector in Edo State is undergoing an unprecedented transition which BEDC has failed to utilize. Today, Ossiomo power is providing affordable, secure and reliable electricity by attracting investors with low risk, stable returns. BEDC has not taken advantage of the liberal investment incentives here and improved power supply from Ossiomo. BEDC cannot provide electricity for industrial customers, for processing, producing, or assembling goods including diverse industries such as manufacturing, mining, agriculture.
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.


Inwalomhe Donald, Benin City [email protected]


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