…To invest N28 b in 2 yrs
By Emma Ujah, Abuja Bureau Chief
Quest Electricity Nigeria Limited has acquired the Yola Electricity Distribution Company (YEDC) with a bid price of N19 billion.
The Bureau of Public Enterprises (BPE) in a statement by Amina Othman, Head, Public Communications, yesterday, indicated that the Share Sale and Purchase Agreement (SSPA) for the privatisation of YEDC was signed between the agency and the investor, on Friday, last week.
It quoted the Director-General (D-G) of the BPE, Mr. Alex Okoh, as saying that in addition to paying the purchase fee of N19bn, the new investor has committed to a Performance Improvement Programme which would involve an investment of N28 billion, over a period of two years.
He said that Quest Electricity was committed to improving the quality of life of the inhabitants in the North-East geopolitical zone, through aggressive investment drive, thereby providing an economic tool for combating the insurgency in the region.
According to the D-G, “This investment will be utilised for the purpose of carrying out an extensive upgrade of the Company’s electricity distribution network, in order to bring the business to the level of financial viability.
“It is expected that the increase in energy supply will stimulate economic growth and development in this region through: the creation of new industries and opportunities; attracting much needed investment; and boosting job creation.”
The investor’s performance targets include:
*Reduction in ATC & C losses from the current level of 80% (which is the highest in the industry) to 29% (this translates to a 51% loss reduction);
*Growth in customer base from 396,650 to 596,650 (which represents close to 50% increase); and
*A significant increase in energy supplied from 1,305 GWh to 1,714GWh (an increase of over 400 GWh (31% increase).
While noting the rigorous process of the negotiation which took place in the wake of the Covid-19 pandemic and its crippling impact on economic activities as well as, the challenging operational environment in the North East region of the country, Mr. Okoh described the deal as a testament to the commitment and doggedness of the parties to deliver on the transaction and the high collaborative spirit between the Federal Government and the Core Investor.
His words, “It is a clear indication that there is still a significant level of interest on the part of investors in the Federal Government’s reform and privatisation programme, notwithstanding the challenges in the power sector and the reaction that has trailed the privatisation process.
“This continued interest shows that the Federal Government took the right decision in reforming the power sector.”
In his remarks, the Chairman of Quest Electricity Nigeria Limited, Alhaji Adamu Mele, noted the insecurity in the company’s area of franchise but assured that it would work round it to transform the distribution company within a short time through infrastructure upgrade.
Two firms- Quest Electricity Nigeria Limited and Sandstream Nigeria, submitted proposals to acquire the Yola Disco early 2018, out of the 12 that earlier indicated interest in the Disco.
However, by March 2018, BPE said that Sandstream’s submission for Yola Disco was found to be non-responsive, as it failed to include a bank guarantee in line with the requirements in the Requests for Proposal (RfPs).
Accordingly; the representative of the firm took the bid back.
Yola Disco was successfully privatised and handed over to a core investor, Integrated Energy Distribution and Marketing Company, which acquired 60 per cent equity in the YEDC in 2013.
However, a force majeure was declared in 2015 by the core investor, citing insecurity in the North-East region of the country.
Following this, the company was duly repossessed by the Federal Government, after which the National Council on Privatisation gave the BPE the approval for a fresh transaction that culminated in the new deal.