Abia State Governor, Dr. Alex Otti, has received the initial due diligence report on the planned acquisition of a 60% stake in the Enugu Electricity Distribution Company (EEDC) assets in the Umuahia zone.
The acquisition aims to complement Geometric Power’s current supply to Aba and its environs, and ensure a more reliable power distribution network across Abia State.
The report was presented at the Governor’s office by a team of four reputable consulting firms engaged by the State Government to conduct an extensive due diligence exercise.
The consortium includes Deloitte and Touche (Lead Consultant and Financial-Tax-Commercial Adviser), Ken Ahia SAN & Associates (Legal Adviser), Kosem Nigeria Limited (Technical Adviser), and Heritage Capital Markets Limited (Accounting Experts), with Afrexim Bank present as the financier.
Governor Otti emphasized the importance of securing a fair deal that benefits both the State Government and the seller, Interstate Electrics Limited.
He clarified that the Government does not intend to retain the full 60% stake but aims to lead the acquisition, de-risk the investment, and subsequently divest into other private sector players.
“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.
“The Government does not plan to hold 60%; we can lead the way with the acquisition, de-risk, and subsequently divest into other potentially interested private sector players. We felt that is a better way to go than inviting some private sector”, Gov Otti stated.
The Governor also highlighted the challenges faced by other Power Distribution Companies (DISCOs) in Nigeria, including overvaluation and unrealistic expectations, leading to post-acquisition struggles.
“If you go back to check, you will find virtually all the DISCOs are struggling; the reason for the struggle is a discussion for another day.
“Some of the DISCOs were overvalued, while others were very expectant. Post-acquisition, they discovered that maybe the major problem was not what they thought it would be”, the Gov noted.
He pointed out that Power Generation and Transmission are critical issues, stressing that “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”, he explained.
Governor Otti noted the potential to harness excess capacity from Geometric Power in Aba, which currently produces 75 MW, less than half of its total capacity of 188 MW.
He recounted his visit to Geometric Power with the European Union (EU) delegation, led by Mr. Massimo De Luca, and emphasized the strategic importance of wheeling excess power to Umuahia to solve domestic electricity challenges.
“For me, it is a transaction that we must do, and the question is how do we safely do it, leaving everybody happy? That is why we are doing all these.
“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, and that’s why all of you are in the room, and that’s why I devoted this time just to listen,” the Governor remarked.
Governor Otti expressed confidence in the viability of the project, noting that it represents an innovative solution that has not been implemented anywhere else in Nigeria but is already proving effective in Abia.
The Umuahia ring-fenced area covers Umuahia-North, Umuahia-South, and Ikwuano in the Abia Central zone, as well as the entire five Local Government Areas of Abia-North Zone, including Arochukwu, Bende, Isiukwuato, Ohafia, and Umunneochi.
Geometric Power presently supplies power to Aba and its environs comprising Aba-North, Aba-South, Isiala Ngwa-North, Isiala Ngwa South, Obingwa, Osisioma, Ugwunagbo, Ukwa-East and Ukwa-West LGAs, the entire Abia-South Zone of the State and parts of Abia-Central.
The Abia State Government team present at the briefing included the Honourable Commissioner for Power and Public Utilities, Engr. Ikechukwu Monday, Honourable Commissioner for Finance, Mr. Uwaoma Ukandu, Special Adviser to the Governor on Energy, Engr. Kachy Etolue, Director-General of the Ministry of Finance Incorporated (MOFI), Mr. Osinachi Nwaka, and Technical Assistant to the Governor, Mr. Charles Egonye.
They engaged the consultants in a detailed discussion, addressing questions and concerns while providing feedback to be incorporated into the final due diligence report, expected in the coming days.
