The Dilemma of Nigerian Investors in the Power Sector: The Story of Dr. Tunde Ayeni

The honourable Minister for Power, His Excellency Babatunde Fashola has been quoted to have said that, “It is no longer news that the power distribution companies are having difficulty funding distribution infrastructure. Therefore, as a collective 40% shareholders, we cannot sit back without finding a solution.” Fashola had confirmed at different fora that the DisCos were having serious problems with the funding of their distribution infrastructure which has negated against their invested funds.

BY OrobosaOmo-Ojo, JP

The honourable Minister for Power, His Excellency Babatunde Fashola has been quoted to have said that, “It is no longer news that the power distribution companies are having difficulty funding distribution infrastructure. Therefore, as a collective 40% shareholders, we cannot sit back without finding a solution.” Fashola had confirmed at different fora that the DisCos were having serious problems with the funding of their distribution infrastructure which has negated against their invested funds.

Also reacting to the excruciating financial regime under which the DisCos are operating, the Director General of Bureau of Public Enterprises, Alex Okoh admitted the need to solve the liquidity challenges confronting the various operators. Worried about the situation, the DG said: “We need to solve the liquidity challenge…if we take all the energy sold, assuming there is minimal losses on collection side, we will find it difficult to get enough revenue to push us through”.

The Minister’s revelation is a microcosm of the of what has bedevilled the operators of Nigeria’s Electricity DisCos, particularly the investors who had borrowed money from Banks at commercial bank rates to support the Federal Government’s 40% stake in the sector.

Ironically, from all these identified problems and solutions, nothing has been said as a curative for the huge financial exposures that the investors have found themselves. It is against this backdrop that Nigerians believe that the privatization and deregulation programme was designed for foreigners and not Nigerian businessmen and businesswomen.

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One of the fundamental reasons why the energy sector has remained comatose despite Nigeria’s abundant natural gas and technical expertise is the weak financial backbone which has continued to deter prospective investors from aggressively contributing to government’s desire to meet the energy needs for our industrial and domestic needs.

The few large-hearted, good spirited young Nigerians who are ready to brace up for the challenges have had their dreams aborted and they end up being labelled as an economic saboteur, in addition to their pain of not having any returns for their investment. This is the dilemma of Dr. Tunde Ayeni, a key promoter of Integrated Energy Distribution Company, a patriotic young Nigerian Lawyer, who believes in the determination of the President MohammanduBuhari’s administration plan to make Nigeria self-sufficient in her energy need.

There are eleven successor Discos in Nigeria, arising from the unbundling of the Power Holding Company of Nigeria (PHCN). The eleven Discos have been fully privatised and are private sector operated and managed, with the exception of Yola Disco, where the core investor declared force majeure arising from the continued insurgency in North-Eastern Nigeria. The Bureau of Public Enterprises (BPE), on behalf of the Federal Government and Labour, own 40 per cent of the shares of all the eleven Discos, while various Core Investors have a 60 per cent shareholding in the respective Discos.

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It is important to point out that Tunde Ayeni and his partners were the core investors for the Yola Disco that they have since returned to the Federal Government through the Bureau of Public Enterprise. Yet, Federal Government has not refunded the contribution made by Dr.Ayeni and his team. But in a most bizarre manner, the same federal government through her agencies is persecuting the very person they owe $180 million since 2015.
If this amount was settled by the federal government, it should have helped to defray the loan advances by the defunct Skybank. Without a doubt, the refusal by the government to make refunds to Integrated Energy Distribution Company has led to the unsustainable debt crisis that the company subsequently relapsed into due to no reasons of their own.

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With the delay in a refund, the company was left to service the loan on behalf of the federal government, even with the hike in the foreign exchange market. It is instructive to state that the part of the loan was sourced at a conversion rate of N150 to the dollar, which skyrocketed to N380 at the close of 2017.

These challenges have severely constrained the operations of Discos and thus, the non-realisation of the supposed gains of the privatisation of the power sector.

In reality, these challenges were underestimated and completely overlooked, by the Federal Government through the BPE and NERC on one hand, and the core investors and their financiers. Realising these lapses, it will be more helpful to the nation to support the core investors of the DisCos to overcome their debt overhang that is threatening their survival.

Rather than this obvious persecution, the government should refund the $180 million with interest to Integrated Energy Distribution Company to defray the company’s exposure to Skybank rather than allowing divisive elements through sponsored stories to portray a businessman in a bad light.

In addition, the Central Bank of Nigeria can also restructure the outstanding loan with Skybank (now Polaris Bank) into long-term debt or equity. This will further demonstrate the readiness of the President to attract and retain local investors in the country.

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If there was any doubt about the intentions of Dr. Tunde Ayeni’s adversaries, a similar on-going attack on him, which again is based on his rapid success stories at NITCOM and NTEL, the once-derided Nigeria Telecommunication Company (NITEL and MTEL) has put paid to the fact that his travails were heinously planned and is being systematically executed.

NTEL became Nigeria’s fifth mobile network and first to deploy pure play 4G/LTE advanced network in 2015 after a successful rigorous bid process that eventually selected NATCOM Telecommunications, a consortium headed by Dr.Ayeni as the preferred bidder for the Nigerian Telecommunications Limited (NITEL).

The sale of NITEL went through a “guided liquidation” process led by the Bureau of Public Enterprises (BPE). The Nigerian government eventually handed over NITEL and MTEL assets over to NATCOM (NTEL’s parent company).

Quickly, the new owners transformed the moribund telecom company into a world-class enterprise and with this feat, came needless attack. The giant strides NTEL recorded within the short time after commercial launch brought many hurdles, which NatCom has had to overcome. Undaunted, the company has remained focused and has continued to contribute to the growth of Nigeria’s economy, providing thousands of jobs in the process.

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From available records, it is clear that SkyBank played a pivotal role in the financing of NTEL, which at the onset was good business that had no hidden agenda but purely business financing – which is in line with the mandate of any board. The initial purpose of bringing the two transactions to the bank was to contribute to its profitability that should have contributed to her bottom-line. Happily, the two companies (Yola DisCo and NTEL) are going concerns. The cash flow of the respective companies and the refund US $180 million expected from the Federal Government of Nigeria can easily defray the exposure of NTEL to the defunct Skybank. The ongoing needless harassment and media trial of Dr. Tunde Ayeni must stop because it is capable of discouraging local investors.

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