The Federal Government has received a strike notice from organized labor in the country’s electricity sector, which opposes the takeover of some electricity distribution companies, or DisCos, by banks and other entities.

“It is obvious that the owners of these DisCos would not have obtained loans from Banks with the DisCos/Facilities as collateral Pre-Privatization and there is no way the Banks will seize DisCos, GenCos or any other Company before take-over under the pretense that they were indebted to them,” organized labor argued in a 14-day ultimatum sent to the Federal Government on July 7, 2022, through the Ministers of Power, Labour, and Employment, among others.

Insisting that it had been vindicated, Labour recalled advising the Federal Government prior to the privatization of the assets of the now-defunct Power Holding Company of Nigeria, or PHCN, that those pressing to buy lacked the financial and technical capacity to run the industry.
“It does not make both technical and socio-economic sense for the Federal Government to indirectly hand over the operations of Electricity Companies to Banks,” organized labor said under the auspices of the National Union of Electricity Employees, or NUEE.

Concerns about what the Union called “the alarming developments in the Power Sector where Banks are practically taking over Distribution Companies (DisCos) and other Power facilities in the Country based on perceived defaults to repay loans allegedly borrowed by the DisCos” were raised in the strike notice, which was signed by Joe Ajaero, the general secretary of the NUEE, among others.

It is documented that the Union warned the Federal Government and the country as a whole about these companies’ inability to finance the purchase of the 18 unbundled power sector companies prior to their privatization.

Regretfully, the Federal Government disregarded the warning and granted these companies loans that were likely obtained from commercial banks. The Federal Government helped us realize that investors have the technological and financial resources necessary to propel the industry.

“Now that the “chicken has come home to roost,” it has been found that the majority of these private investors most likely do not have the ability to repay the bank loans. It is clear that the owners of these companies (DisCos) would not have taken out bank loans using the Distribution Companies/Facilities as collateral prior to privatization, and banks would never take over DisCos, GenCos, or any other company under the guise of debt.

We had previously demanded that the privatization process be reviewed for its obvious flaws. The Federal Government’s indirect transfer of electricity company operations to banks is not a sound socioeconomic or technical idea.This has played a role in the Power Sector’s near-collapse. Furthermore, the federal government’s consideration of additional privatization in the power sector is absurd. We’re waiting.

We demand the departure of banks (whose presence has been a distraction) in light of these developments, the threat to our members’ jobs from job losses, the nonpayment of salaries and allowances, the growing difficulty in managing these business concerns on a daily basis, and the general unease that permeates the sector.

Based on the aforementioned, the Union gives 14 days’ notice for these and other difficulties, such as the annoying letter from the Head of Service, for which notice has already passed; if these issues are not resolved, our services will no longer be secured. This poses no hazard.
FG describes the takeover.

“The recent change in the equity ownership of some of the Electricity Distribution Companies (DisCos) was a lender action, stepping in to take over the shares of the associated core investors largely as a result of failure to honor debt obligations,” the Federal Government, through the Permanent Secretary, Ministry of Power, among others, explained in a July 20 response letter. It is important to clarify that this is not because DisCos, as distinct legal organizations, owe money. Therefore, the ownership and corporate governance of the DisCos result in the Banks’ involvement at the Board level.
We want to reassure your union’s leadership that the Central Bank of Nigeria, which oversees the banking sector, has already promised to make sure the banks don’t keep the shares forever. In this context, banks would leave these public utilities early to make room for the sale of their shares to other capable operators in accordance with current government policy on the reform agenda, subject to the supervision of the appropriate government agencies.

The main goal is to guarantee that customers receive a sufficient and dependable supply of power in a way that doesn’t interfere with the DisCos. In this sense, utility employees are crucial collaborators to  the achievement of the aforementioned objectives.