Their Doubts, Their Fears

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Doubts surround the technical ability of Interstate Electrics, the preferred bidder to efficiently manage Enugu Disco taken over by it

By Anayo Ezugwu  |  Nov. 25, 2013 @ 01:00 GMT

WILL the successful handover of the Enugu Electricity Distribution Company to Interstate Electrics, on November 1, change the state of power supply in the south east and some parts of south-south? This is the question people from the catchment area are asking, following allegations of political arm-twisting in the takeover of the Disco company. This has raised fears that Interstate Electrics cannot manage the dilapidated facilities in the Disco

The handing over of the Enugu DISCO to Interstate has sparked off controversy. Some concerned citizens in the eastern part of the country have expressed the fear that handing over the assets to Interstate would take the region backward in terms of development. Osita Okechukwu, a native of Enugu State, cried foul over the choice of Interstate Electric as the core investor to manage Enugu DISCO. He said Enugu residents are at a loss as to how Interstate was chosen as the preferred bidder. “One is at a loss as to how a company that failed woefully to pass the initial litmus test of consistency, in which it got negative net present value, and moreover, failed to pay before the deadline, could be handed over the lifeline of enterprising and hard working Nigerians from the south east and some parts of south-south,” he said.

The controversy that dogged the sale of Enugu Disco to Interstate Electrics started after the August 21, deadline for the payment of 75 percent tranche by preferred bidders for the 15 unbundled Power Holding Company of Nigeria, PHCN, successor companies. Interstate Electrics paid $12 million, being part of the 75 percent of the bid sum to the BPE on August 29, eight days after the deadline had expired. The Bureau of Public Enterprises, BPE, had kept mute several days after the deadline, refusing to confirm which firms had paid and which defaulted. Consequently, the rumour mill went agog with claims and counter claims that questioned the credibility of the entire process.

Dikki
Dikki

This made Eastern Electrics, the reserve bidder for the Enugu Disco, to sue the BPE and the National Council on Privatisation, for denying it the right to acquire 60 percent stake in the power firm. C. Don Adinuba, communication consultant to Eastern Electrics, told Realnews that the reserve bidder has a case at the Federal High Court in Abuja, against the BPE and the NCP. The case was instituted by Eastern Electrics to enforce its right to be invited as the reserve bidder of the Enugu Electricity Distribution Company, following the failure of the preferred bidder to meet the payment schedule.

He said that the handover of Enugu DISCO to Interstate would affect the level of infrastructural development in the region. “We approached the court to save the Igbo people who have been short changed. As we are talking, the south east has the worst power infrastructure in the country. Again, power as you know very well, is a very important part of development. Interstate Electrics does not have the management, financial and technical expertise to do the work. Therefore, there will not be any remarkable power improvement in the area. Consequently, there will not be any socio-economic development in the south east. It will affect development in the most negative way. This handover is the most way to rip-off the south east by denying it power infrastructural development,” he said.

The court had issued an injunction restraining the NCP and the BPE from handing over Enugu DISCO Interstate. In spite of a subsisting court injunction, the NCP and the BPE, handed over the company to Interstate Electrics. Realnews learnt that this decision was held behind the ministers of finance, power, petroleum resources and other critical stakeholders, who were not in the country at that time and would have likely objected to bending the privatisation rules to favour Interstate Electrics. Realnews also learnt that some top officials in the presidency were behind the manipulation which was tailor-made to favour political allies and associates.

But Robert Dickerman, managing director, Interstate Electrics, said that the firm would reposition the DISCO far beyond the expectations of Nigerians. “I have been in the energy business for almost 35 years now. And I have been in the power sector for a long time; I have managed utilities. I have seen a lot of the challenges in transformational markets. To be honest with you, one of the reasons Interstate asked me to come here and lead this effort is because I have a very strong interest in transforming markets. Hopefully, the execution will be as good as the intent and some of that is up to our team, and we will be focusing very seriously on that. But the design of the privatisation makes a lot of sense to me.  I wanted to be part of it.

“The process that has been in place today has allowed limited traditional due diligence. And due diligence is the process where a buyer who is acquiring a company gets to learn about its business from its data, from talking to its management, from learning about its business processes, and everything else that one would want to know in order to develop a specific actionable, executable plan for what they are going to do after they take over the business. In this case, the processes that were designed, because of some issues between the staff and government, limited the amount of access that we had to the data, and to the management of the company.  But within those restrictions, we still were able to get in there, and put in some shadow managers, and get some data and do some analysis. The fortunate part of this is that we had a lot of industry experience on our side to enable us to interpret the limited information that we got to develop an actionable plan. I am very confident that we have actually had a solid actionable plan and we are going to operate the utility for the benefit of customers,” he said.

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