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Monday, 26 February 2018

Osinbajo stops Fashola from inaugurating more directors

Osinbajo stops Fashola from inaugurating more directors

Vice President of Nigeria- Yemi Osinbajo

* World Bank meets power firms over $486m grant

The planned inauguration and appointment of two Non- Executive Directors for each of the 11 Distribution Companies (DISCOs) last Monday in Abuja by the Minister of Power, Works and Housing, Mr. Babatunde Fashola (SAN), was stopped by Vice President Yemi Osinbajo, New Telegraph reports.

The halting of Fashola’s move is coming just as the World Bank met with the CEOs of DISCOs last Friday to discuss modalities for the disbursement of global bank’s $486 million power grants meant to improve Nigeria’s electricity transmission network and infrastructure.

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Further checks revealed that the World Bank had insisted that it does not want any government official at last Friday’s meeting billed for 2p.m. in Abuja.

It was gathered that the World Bank, as part of its conditions for disbursing the power sector credit, had informed the Federal Government to ensure that its representative at the boards of the DISCOs are experts in the power sector and not just politicians.

But Fashola was said to have seen the World Bank’s advice as an opportunity to make more board appointments on the premise that this was to further instill more corporate governance in the power firms, a move which the DISCOs described as illegal and vehemently opposed.

The minister, it was gathered, had penultimate Sunday, about 3a.m., sent an invitation letter to the CEOs of electricity companies, intimating them of the Federal Government’s plan to appoint and inaugurate two non-executive directors for DISCOs the following day (last Monday) at the Transmission Company of Nigeria (TCN) Building in Abuja.

On receiving these letters, the power firms’ CEOs were said to have inundated the Bureau of Public Enterprise (BPE) with calls, which contacted Osinbajo, who eventually directed that the planned inauguration be stopped immediately.

“The Vice President took this critical decision after he was informed by the BPE of the danger posed to the country’s integrity with the abrupt plan to appoint and inaugurate two non-executive directors for DISCOs,” a source at the Presidency told this newspaper.

Meanwhile, at the meeting with the World Bank on Friday, the DISCOs were said to have discussed their problems with the global bank, which pledged to meet with the government and get back to them.

The $486 million grant for rehabilitation and upgrading of electricity transmission substations and lines, is, according to World Bank, scheduled to increase the power transfer capacity of the transmission network and enable distribution companies supply consumers with additional power.

“Together with other investments and policy measures, the project will contribute to ensuring adequate and reliable electricity supply that is necessary for Nigeria’s continued economic development,” the bank said on its website.

“It will also support private sector participation, capacity development and better governance in Transmission Company of Nigeria and sector institutions,” it added.

The project is part of the Power Sector Recovery Programme (PSRP) by the Federal Government, which is a comprehensive package of policy, legal, regulatory, operational and financial interventions that will restore the financial viability of the power sector.

The measures that will be implemented through 2021 are aimed at improving transparency and service delivery and re-establishing investor confidence in the sector.

“The Nigeria Electricity Transmission Project will help address key bottlenecks in the transmission network and improve access to affordable and reliable electricity service to citizens,” World Bank Country Director for Nigeria, Rachid Benmessaoud, said.

Meanwhile, the investors in the power sector, who registered their displeasure over the planned inauguration, described the move as illegal. They insisted that it was not consistent with extant regulations.

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They said the appointment of non-executive directors “violates the Companies and Allied Matters Act (CAMA); Memorandum of Association and Articles of Association of the DISCOs; and the acquisition and privatisation documents executed by the DISCOs, the investors and the BPE, that is, the shareholders’ agreements.”

CAMA, they argued, is the principal statute regulating companies in Nigeria, stressing that CAMA specifies who has the power to appoint directors and the procedure for such appointment.

Citing Section 248 of CAMA, they added that it is the members in general meeting or in the event of a casual vacancy, the board of directors of a company that has the powers to appoint new directors, according to Section 249 of CAMA.

“While we note that BPE and MOFI (Ministry of Finance) are shareholders of the company, they may not unilaterally appoint new directors,” they insisted.

This power, they argued, could only be exercised collectively by a resolution decided by a simple majority vote of the shareholders present, in person or by proxy, at the general meeting.

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