The Planned Acquisition Of 60% EEDC Shares by Abia State Government – What and Why?
Enugu Distribution Company Plc (EEDC) was incorporated as a Public Liability Company in 2005 following the unbundling of Power Holding Company of Nigeria (PHCN). In 2013, Interstate Electrics Limited took over the management of EEDC after the purchase of 60% of EEDC shares from the federal government through the privatisation process leaving 40% shareholding shares to Federal, State and local governments, warehoused by Bureau of Public Enterprise (BPE) and Ministry of Finance Incorporated (MOFI).
EEDC operates within the Nigerian Electricity Supply Industry (NESI) framework, licensed by Nigerian Electricity Regulatory Commission (NERC) to provide electricity to the five south eastern states (Abia, Anambra, Ebonyi, Enugu and Imo).
In 2022, The Bureau for Public Enterprises facilitated the handover of the Aba Electricity Ring Fenced Area from EEDC to Geometric Power which is currently operated by Aba Power Limited. The Aba Ring-fenced area covers 9 of 17 local government areas of Abia State and leaving the remaining 8 local government areas under the Umuahia District to EEDC.
Unfortunately, Umuahia District has suffered significant poor performance by EEDC due to poorly maintained and outdated infrastructure leading to power outages and high ATC&C losses with no significant capital investment to ensure a robust distribution network. This has resulted to energy starvation to Abians residing in these local government areas. Hence, it is very critical for a drastic action to transform the current situation.
Consequently, Abia State Government (ABSG) led by His Excellency, Dr. Alex Otti OFR decided to take the destiny of our people in our hands by considering the acquisition of Interstate Electric’s 60% equity stake in Enugu Electricity Distribution Company Plc’s (“EEDC”), within Abia State proposed as the ‘Abia ring-fenced asset’.
The state government believes that electricity distribution is a very critical sector in the power value chain because it directly impacts economic growth, poverty alleviation, and quality of life of our people. The provision of reliable access to electricity is very critical for the growth of SME’s, industries, education, health, etc. As promised by His Excellency, the Executive Governor of Abia State in his manifesto to collaborate with stakeholders in the electricity sector towards the provision of reliable access to electricity in our state as the primary catalyst for this initiative. The Governor believes that a well-functioning power distribution sector will attract investments which will enable socio-economic growth of Abia state.
Considering the Electricity Act 2023, which mandates states to create and regulate her electricity market, Abia State assumed an advantage position to transform, de-risk the business and attract serious investors with the prerequisite expertise and capacity to operate the Abia Ring-Fenced Area.
The ring fencing of the Umuahia district just like the Aba Ring Fenced Area will make Abia State a power Island that will be less dependent on the unreliable national grid. The Abia Ring fenced area will off-take excess power generated in the state and attract investment in independent power generation.
The government clearly understands the concerns raised by some stakeholders to trade with caution because no DISCO in Nigeria have operated successfully. That is why the state conducted proper technical, commercial, financial, tax, legal and valuation due diligence on the EEDC business within Abia State. The recommendations of the reports will form the basis of negotiations going into the next stages of the transaction. As stated by the governor, Dr. Alex Otti OFR, “we want a fair deal for our people” and that stands as a primary motivation going forward.
Engr. Ikechukwu Monday
Commissioner for Power and Public Utilities.
