Elumelu’s Transcorp consolidates hold with resignation of Abuja DisCo boss

Christopher Ezeafulukwe, the MD/CEO of Transcorp Power has assumed the leadership position at troubled utility, Abuja Electricity Distribution Company (AEDC) following the resignation of Adeoye Fadeyibi, its former MD, in a move signaling Transcorp’s push at consolidation.

The new reforms planned by the Bola Tinubu government hint at major reforms in the power sector with the integration of the gas and power ministry to create the Ministry of Energy, exiting subsidies to the sector, and taking over management of troubled DisCos.

Before his ministerial appointment ran into troubled waters, Nasir El-Rufai tapped to head the new Energy Ministry, said the ownership and management structure of at least six indebted electricity distribution companies (DisCos), including AEDC would change, as a stress test revealed that only three DisCos were viable.

“Ten years after privatisation, the government is in one way or the other subsidising electricity, the last time I checked, it was about N1.6 trillion in a privatised environment. This is unsustainable and unacceptable.

“But what do we do with the distribution companies, they have been privatised about five or six of them are under receivership because those that bought the companies borrowed from banks and have not been to pay the banks, so the banks have taken over five or six of them and the last time we did a stress test on the DisCos only about three of them out of eleven are doing well,” El- Rufai said.

Recall that in May, Transcorp acquired AEDC after securing government approval. Analysts say AEDC’s new owners are being proactive. Fadebyibi, the former MD had been tapped to run AEDC “because there was a critical need for someone with sufficient capacity to take reins quickly when AEDC had major shareholder and loan liability issues,” said an industry expert.

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In his role at the helms at AEDC, Fadebiyi, who previously was the MD of Eko DisCo, undertook the delicate process of helping the lenders transition from controlling shareholder of the bank holding AEDC’s acquisition debt to the buyer of that debt through Transcorp Holdings. Nigerian billionaire, Tony Elumelu chairman of Heirs Holdings is also the chairman of Transnational Corporation of Nigeria.

Following the inability of AEDC’s core investor KANN Utility Company to repay the $122m it took as loans to buy a 60 percent stake in the DisCo, the lenders, UBA, took over the KANN’s stake with the approval of, the Nigerian Electricity Regulatory Commission (NERC), the sector regulator, and the Bureau of Public Enterprise (BPE) which holds the 40 percent government stake in AEDC in 2021.

An interim management was appointed led by Bada Akinwumi as interim managing director; Sani Usman as interim chief business Officer, Babajide Ibironke as interim chief finance officer; Donald Etim as interim chief marketing officer; and Femi Zacchaeus as an interim chief technical officer. A new team with Fadebiyi as MD was appointed in March 2022.

While the banks have been quick to push for the change of ownership of troubled DisCos, the results as shown in NERC’s 2023 first quarter report do not indicate that the troubled DisCos are now operating on improved governance systems, nor are they adding required investments to improve the network. DisCos still cannot collect a third of the energy billed and customers’ complaints about poor quality of services increased.

Christopher Ezeafulukwe was an Executive Director of Transnational Corporation of Nigeria, where he was responsible for Business Development and Legal. He has over 19 years of experience working as an executive-level professional, Christopher has extensive experience in business development and management, legal, transaction advisory and support services, as well as company secretarial and related practices.