The move came on the heels of the declaration of force majeure by the core investor of the beleaguered power firm.
Consequently, the Federal Ministry of Power has taken over the management and control of the electricity distribution company.
The ministry has also appointed Mr. Baba Mustapha, an engineer, who was formerly a Deputy Director in the Ministry, to lead the company in the capacity of an acting Managing Director.
Mr. Alex Okoh, Head of Public Communication, Bureau of Public Enterprises, confirmed the takeover of the electricity distribution company in Abuja on Thursday, but declined comment on further information about the take over.
On six occasions (November 10, 2013, August 27, 2014, October 15, 2014, April 9, 2015, April 30, 2015 and May 13, 2015) Integrated Energy Distribution and Marketing Company had 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.
By Patrick Aigbokhan