…Receives Due Diligence Report On Planned Acquisition

After the successful takeover of electricity power generation and distribution in Aba by Geometric Power, Governor Alex Otti has proceeded to acquire Interstate Electric Ltd’s 60% stake in Enugu Electricity Distribution Company (EEDC), for the Umuahia ring-fence.

Pursuant to his vision of independent, stable power supply and distribution to all parts of the State, the Governor received the due diligence report on the planned acquisition by four reputable organisations that handled different aspects of the assignment, including, 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) in the presence of Afriexim Bank (Financier).

The Umuahia ring-fenced area covers Umuahia-North, Umuahia-South, and Ikwuano in Abia Central and the entire five Local Government Areas of Abia-North Zone – Arochukwu, Bende, Isiukwuato, Ohafia and Umunneochi.

Geometric Power presently supplies power to Aba, Abia South and parts of Abia Central, comprising Aba-North, Aba-South, Isiala Ngwa-North, Isiala Ngwa South, Obingwa, Osisioma, Ugwunagbo, Ukwa-East and Ukwa-West LGAs.

Reacting to the report, Otti underscored the importance of ensuring a fair deal, both for the Government and the Seller, Interstate Electrics Limited.

“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 didn’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….

“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.

“One of the key issues is generation, another issue is transmission. 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 recalled his visit, with the European Union (EU) delegation to Geometric Power, Aba, reiterating that instead of wheeling excess power to the national grid, it is better to wheel it into Umuahia to solve the domestic power problems.

“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 this. 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.”

He expressed hope that it would do so much with Geometric Power currently producing 75 MW, which is less than 50% of the current capacity of 188MW, adding that after solving the gas supply-related problems, Geometric can wheel power to the Umuahia Zone once the functional Infrastructure was in place, making the project viable, an experiment he noted, had not been done anywhere in Nigeria but was already working in Abia State.

The Abia State Government team is made up of 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, Ministry of Finance Incorporated (MOFI), Mr Osinachi Nwaka, Technical Assistant to the Governor, Mr Charles Egonye and representatives of Afriexim Bank.