Emmanuel Ugwu-Nwogo in Umuahia
Abia State Governor, Alex Otti, has expressed his determination to pull off a planned deal that would make the state acquire 60 per cent stake in the power assets of the Enugu Electricity Distribution Company (EEDC).
The deal would ultimately free the Umuahia ringed fence area, comprising eight local governments, cutting across Abia Central and Abia North zones, and place them under the service area of Geometric Power Limited, which supplies electricity to 53 per cent of Abia.
Umuahia area is made up of eight local governments — Umuahia-North, Umuahia-South, and Ikwuano in Abia Central zone, and the entire five local governments of Abia-North Zone — Arochukwu, Bende, Isiukwuato, Ohafia and Umunneochi.
Geometric Power currently supplies power to the Aba ringed fence area comprising nine local governments — Aba North, Aba South, Isiala Ngwa-North, Isiala Ngwa South, Obingwa, Osisioma, Ugwunagbo, Ukwa-East and Ukwa-West.
But Otti has a broader vision of achieving independent, stable power supply and distribution to all parts of the state hence the move to free the entire state from the service sphere of EEDC.
The Disco, like others, rely on the national grid to source electricity which it supplies to its customers.
However, Otti is pushing to migrate the entire Abia to a more reliable independent power generation and distribution source.
To make the power assets acquisition process run smoothly, government invited experts to study and advise it on the deal.
A government house release weekend stated that Governor Otti on Friday received an interim report on due diligence carried out by experts on various aspects of the power sector.
He described the planned power assets acquisition as a “transaction that we must do”.
The faculty of consultants engaged by the Abia State Government to carry out extensive due diligence on the power assets acquisition include Deloitte and Touche (Lead Consultant and Financial-Tax-Commercial Adviser), Ken Ahia, SAN, & Associates (Legal Adviser).
Others are Kosem Nigeria Limited (Technical Adviser), and Heritage Capital Markets Limited (Accounting Experts).
A representative of Afriexim Bank, which is financing the acquisition deal, was on hand at the submission of the interim report.
Otti underscored the essence of the due diligence report, saying that it will ensure “a fair deal” for the two parties involved in the deal — Abia government, which is the buyer and the seller, Interstate Electrics Limited (owners of EEDC).
“We want to land a fair asset value for the government and the seller. I have maintained that it would be a different discussion if we don’t have the money; however, we can always source the funds, underscoring the reason for Afrexim Bank’s attendance,” he said.
The Abia Governor explained that after sealing the deal, the state government would not permanently hold the 60 per cent acquired power assets but would eventually shift it to private sector investors, having stimulated their interests.
According to him, the intention is to “lead the way with the acquisition, de-risk, and subsequently divest into other potentially interested private sector players”.
Otti, who is a former bank chief, justified Abia’s move to become a player in the power sector, saying: “If you go back to check, you will find virtually all the Discos are struggling.”
“Some of the Discos were overvalued, while others were very exorbitant,” adding that after acquisition, the investors “discovered that, maybe, the major problem was not what they thought it would be”.
“One of the key issues is generation, another issue is transmission; you can’t distribute power that is not available to you. And it is actually the driving force here for us because we can see excess capacity from Aba,” the governor further explained.
Otti stated that instead of wheeling excess power generated by Geometric to the national grid, “it is better to wheel it into Umuahia to solve our domestic problems.
He pointed out that government was taking the pains to go through the process of due diligence in order to smoothen the transaction “leaving everybody happy” at the end of the day.
According to him, “I have an idea of a number that Interstate Electrics is looking at, but you can’t just hit a hand on your head and quote a random asset value; it needs to be derived by experts.”
He thanked the team of experts for working with Abia on the acquisition process, saying that the deal would do a lot of good to the state with Geometric Power currently producing 75 MW, which is less than 50 per cent of the installed capacity of 188MW.
The Abia governor insisted that the project is viable because after overcoming the gas supply-related problems, Geometric can wheel power to the Umuahia Zone once the functional infrastructure is in place.
He said that the deal Abia was going into in the power sector “is an experiment that has not been done anywhere in Nigeria but is already working here in Abia”.
