FG takes over Yola Disco from private investors


Following the declaration of force majeure by Integrated Energy Distribution and Marketing Company, the core investor in the Yola Electricity Distribution Company, the Federal Government has taken over the beleaguered power firm.

Consequently, the Federal Ministry of Power has taken over the management and control of the electricity distribution company.

It has also appointed Baba Mustapha, an engineer, to lead the company in the capacity of an acting managing director. Before his new appointment, Mustapha was a deputy director in the Ministry of Power.

Integrated Energy Distribution and Marketing Company had on six occasions (November 10, 2013, August 27, 2014, October 15, 2014, April 9, 2015, April 30, 2015 and May 13, 2015) given notices of force majeure, which is an irresistible force or compulsion such as will excuse a party from performing his or her part of a contract.

Consequently, the matter was tabled before the sub-committee of the Technical Committee on Power of the National Council on Privatisation at one of its meetings.

The sub-committee recognised the reality of the force majeure, which was in line with clause seven of the Share Purchase Agreement and made recommendations to the technical committee.

The force majeure clause is a standard clause in most contracts and includes events like natural disasters, wars and other occurrences not within the power or control of the executing party that makes implementation of the contract impossible.

Clause seven of the SPA stated that in a war situation, where the core investor could not operate, it could invoke force majeure on issues beyond its control.

The Yola Electricity Distribution Company covers Adamawa, Borno, Taraba and Yobe states. Except for Taraba State, the other three have been mostly affected by the activities of the Islamic insurgent group, the Boko Haram, and the subsequent war against it.

The recommendations of the sub-committee were deliberated upon by the Technical Committee of the NCP at its meeting in April, where the basis for the declaration of force majeure was also acknowledged, according to the BPE.

The technical committee made recommendations to the NCP, which at its first meeting for 2015 held at the Presidential Villa, set up a committee comprising the Permanent Secretary, Ministry of Power as the chairman; a representative of the Nigerian Electricity Regulatory Commission and the Director-General of the BPE, to explore the implementation of the terms of the force majeure.

The Yola Disco is one of the 11 electricity distribution companies that were sold to private sector operators in a gale of reforms of the nation’s power industry that led to the unbundling of the defunct monopoly, the Power Holding Company of Nigeria.

Integrated Energy Distribution and Marketing Company won the bid for the YEDC and was required to pay N9.31bn for the firm.

Many Nigerians have expressed disappointment at the turnout of the privatisation exercise as the significant improvement expected from the power sector following the reform has not yet happened.

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