FG Reclaims Control Of Equity Holdings In DisCos

In a landmark move that reshapes the Nigerian power landscape, the Federal Government has reclaimed control over its equity holdings in all electricity distribution companies (Discos).
This has brought to an end its 12-year partnership with the Bureau of Public Enterprises (BPE).

This repossession of the DisCos followed the Ministry of Finance Incorporated’s (MOFI’s ) revocation of a 2012 Power of Attorney granted to the BPE.

It also declared its intention to directly manage FGN equity across various entities.

The Minister of Finance and Coordinating Minister for the Economy Mr Wale Edun and MOFI CEO Dr. Armstrong Takang,in two separate letters to the appropriate officials cited the completion of the DisCo privatization process in 2013 and the subsequent repeal of the Electric Power Sector Reform Act 2005 (EPSRA) as key reasons for the decision.

In the first letter, the Federal Government of Nigeria, through the Ministry of Finance Incorporated (MOFI), terminated the 2012 Power of Attorney (POA) granted to the Bureau of Public Enterprises (BPE). This directive effectively brings back under MOFI’s control the equity interest of the FGN in the successor companies of the Power Holding Company of Nigeria (PHCN).

Edun signed the instrument on January 10, 2024, citing the completion of the privatization process in 2013 and the government’s desire to have MOFI assume ownership, management, and control of its equity holdings as stipulated in its establishment Act.

The 2012 POA authorized the BPE to act on behalf of MOFI in transferring shares of the PHCN successor companies and undertaking related actions. However, with the privatization now complete, the government believes it is more efficient and in line with existing laws for MOFI to directly manage these holdings.

The Minister’s directive instructed the MOFI Board of Directors to:

*Revoke the 2012 POA granted  BPE

*Assume ownership, control, and management of all FGN equity holdings in the PHCN successor companies

*Do the same for all other FGN equity holdings as per relevant laws and contracts

*Issue necessary notices and documents to implement this directive.

The second letter from Takang, aims to streamline equity management and enhance government influence in the sector.

Following the privatization of the DisCos in 2013, the BPE had acted as the custodian of FGN’s shares and appointed directors to their boards.

However, citing the repeal of the Electric Power Sector Reform Act 2005 and internal restructuring within MOFI, the Minister of Finance revoked the Power of Attorney granted to the BPE and directed MOFI to directly manage the FGN’s holdings.

Sequel to the changes, the BPE-appointed directors on Disco boards will be withdrawn with immediate effect while existing BPE-held share certificates will be cancelled and replaced with new ones issued to MOFI.

The DisCos are required to submit board minutes, reports, plans, and financial statements from 2021 to 2023 to MOFI.