FG Moves to Reposition DisCos with New Approach 

The federal government would soon unveil a new pathway to drive efficiency and best corporate governance in the existing Electricity Distribution Companies(DisCos).

A major review of their operations is in the offing after ministry of Finance Incorporated(MOFI’s) resumption of its rights of management of the FG’s 40 per cent shareholding in the eleven DisCos and the various equity stakes in related

energy sector companies which is an essential element of the consolidation.

Recently, the minister of Finance and Coordinating Minister of the Economy,

Mr. Wale Edun, issued an Order to the Board of Directors of MOFI to terminate the Power of Attorney (POA) granted by MOFI to the Bureau of Public Enterprises (BPE) in 2012.

The directors of MOFI were also by virtue of the same order, to assume ownership, control and management of all outstanding Federal Government of Nigeria (FGN) equity in all existing electricity successor companies.

In a further explanation to the action, Edun, pointed out that, a new thinking towards efficiency management of the sector is expected to drive operating efficiency, best corporate governance practices and ultimately maximise the value derived from these electricity assets, in alignment with President Bola Ahmed Tinubu’s economic growth agenda.

To fully achieve the set objectives, MOFI, the Minister said would be restructured and repositioned as an active asset management corporation to develop a strategy for creating a National Assets Register that aggregates and profiles all national assets and investments.

In addition, the move will in developing and implementing policies and regulations that ensure the creation and management of assets from debt-related transactions and also develop and implement policies and regulations that ensure creation and

management of assets from concession-related transactions as well as create a robust pipeline of FG-owned and FG-linked investment opportunities.

It was further determined that in line with global best practice, MOFI would take on an expanded and more active role, not to directly take over and run the corporate entities created around these Federal Government assets but rather to work with its co-promoters and coshareholders to develop and implement corporate policies and practices that ensure that these assets are operated for maximum value.

This revitalised strategy is underpinned by a three-point agenda of establishing and confirming state ownership, professionalising state ownership and strategic resource mobilisation and investment.

The process of reform and restructuring leads to the consolidation and assumption of the ownership rights of MOFI’s shareholdings across various asset classes which will strengthen Government’s shareholder rights and ensures that entities in which MOFI holds equity stakes fulfil their socio-economic responsibilities and generate substantial financial returns for the FGN.

The MOFI has also extended its gratitude to the BPE for its stewardship of these shares.

As a reformed and active entity, MOFI is taking significant steps to ensure that these assets deliver full value to the country, the Minister assured and anticipated stronger collaboration with key stakeholders and, through its concerted efforts, making a tangible impact in contributing to a thriving, resilient and growing Nigeria.

It’s worthy of note that MOFI is a statutory corporation-sole established by the MOFI Act, 1959.

The legislative intendment of the MOFI Act was and remains that the corporation is constituted as the holder and manager of all assets acquired by way of debt or equity capital from the funds of the FGN.

These assets include the investments in the defunct National Electric Power Authority; which, under the repealed Electric Power Sector Reform Act, 2005 (EPSRA), evolved into Power Holding Company of Nigeria Plc and subsequently unbundled into the various electricity “successor companies”, including the eleven distribution companies (Discos).

The BPE had since then held shares in the Discos on behalf of MOFI. This continued for over 10 years after the sales were completed in 2013, until the recent Order by the Honourable Minister of Finance.

In the past 24 months, and particularly since the amendment of the MOFI Act by the Finance Act, 2023, MOFI has been reformed and restructured from a Unit in the Office of the Accountant-General to a full-fledged public sector (FGN) asset management corporation.

This arose from the recognition that FGN assets across practically all economic sectors nominally valued at very significant sums were largely moribund or grossly underutilized and poorly managed.

Consequently, it was determined in 2021 by the then Minister of Finance, amongst other relevant decisions, that MOFI would adopt a new, value-driven strategic direction in aggregating and managing FGN assets.