Federal Government of Nigeria has been called upon to intervene and resolve the crisis between the banks and some companies in the power sector. Following the takeover of some Power Distribution and Generation Companies, Organized Labor in the nations electricity sector issued a strike notice to the federal government rejecting the take over of some electricity distribution companies by banks and some other lending institutions.
According to a letter sent to the Minister of Power, Saleh Mamman, dated July 7th, 2022, Organized Labor contended that it is obvious that the owners of the Disco’s would not have obtained loans from the banks using the Disco’s as collateral for privatization and there is no way banks and there is no way banks would cease Disco’s, Genco’s and any other company before take over under the pretense that they were indebted to them.
Meanwhile the federal government through the minister of Power in a letter dated July 20th, 2022, explained that the recent change in the equity ownership of some of the elctricity distribution company was a lender action, stepping in to take over the shares of the associated
CEO of BrookHeritage Capital Ltd, Femi Olukotun,while reacting to the topic, said, Labor’s move is not surprising, simply because if their continuous employment is going to be in jeopardy over change of ownership, you will expect Organized Labor to react.
Furthermore he said “Genco’s becoming insolvent and banks taking over, I think the expectation at the time of taking over is not what we are witnessing. So I think government should step in and step in very fast in order to to salvage the situation, but what is happening is inevitable”.
According to Olukotun, the banks must have giving out the loan based on cash flow of the Disco’s performing their day to day functions and irrespective of the collateral, there would be a clause within the lending conditions that would warranted the bank coming in as they have done. This is not as asset realization process rather it is a process that wants to save cash flow so as to be able to continue to service the loan and obviously, the banks are not going to for ever. It is therefore, important that government comes in because the banks can not continue to sit on the board of the Disco’s and Genco’s.
It is not ethical and they can not serve their own interest on another person’s property. Remember that the government still has 40% share ownership in all the Disco’s. So government should at this point exercise right of ownership across board and takeover the companies from the banks.
Meanwhile, the Union has a right to be speak out and be bothered, but the problem with that is, they have always been shouting and if they continue shouting like this they(Union) will only be seen as a bunch of noise makers and government will not take them serious. Still they have a right to express their worries over the fact that they could be losing their jobs as a result of the takeover.
Olukotun, also noted that those who took over the Genco’s and Disco’s were not prepared and so did not know what they were getting into. They were summarily not familiar with the terrain.
He concluded by suggesting that government should intervene and carry a total revamping of the electricity sector.