Poor corporate governance why power sector is challenged

The Minister of Power, Adebayo Adelabu has said that the sector is facing challenges due to lack of adherence to good corporate governance practices.

According to the minister, poor governance and performance management practices have eroded value across government owned entities in the power sector value chain.

“Let me give you practical examples of Out of about 14,000 megawatts installed capacity that we have across our generating plants. Government owned plants constitute about 30% of this capacity, usually over 4000 plants owned by Niger Delta power holding company which is 100% owned by the government.

“It will surprise you that all these plants with installed capacity of over 4000 megawatts since inception, have not generated beyond 20% of their capacity. They have produced between 500 megawatts and 800 megawatts out of over 1000 megawatts of capacity. You can only imagine if compared to private sector owned plants like Azura, Transcorp, Pacific, all that have performed the worst, which is why corporate governance of mass government practices must be items on the priority list of the managers of government shares in all these enterprises,” he said.

Adelabu insisted that improved corporate governance is not only about internal efficiency, it is also central to national development.

According to him, good governance will not only ensure their operational excellence, but also boost investor confidence, facilitate regulatory compliance and protect public interests.

“We recognize that improved corporate governance is not only about internal efficiency, it is also central to national development. It ensures that public resources are not only at the door and effectively to serve the broader means of reliability, access and energy transition.

“Let me commend MOFI for leading the charge in repositioning the federal government’s asset management functions and in embedding government as a strategic priority for all federal government owned enterprises. The launch of the public governance scorecard and the pilot assessments are important steps in building a culture of performance, a culture of transparency across the public enterprise and scale.

Also speaking, the Managing Director of MOFI, Ambrose Takang said the federal government is presently carrying out an audit of its assets.

According to the MOFI helmsman, the result of the assets’ audit will influence government decisions.

He said, “We are currently undergoing an asset monetization exercise where we are doing due diligence on each of those assets and speaking to the respective managers and the boards of those companies to get a deeper understanding of where they are, where they intend to go in alignment with the agenda of the administration. They will come up with a number of options available for each of those at that point, we would determine what steps need to be taken for each of them. Some of them we need to recapitalize them. Some of them that are non-strategic, we may need to offload them. And then some of them may go into joint venture partners with more strategic partners, but that exercise will be made available once it is done.”

“The second aspect of it is to begin to talk to strategic partners who have expressed interest in those assets, either through joint ventures, acquisitions or other forms of partnership. And we already have interest in some of those and at the right time, we will determine what decisions to be taken. And of course, you have to go through a process as laid down by our law, as well as our processes through boards, the MOFI board, the boards of those respective entities, as well as the Governing Council of Nigeria, to arrive at that decision.

The Managing Director explained that good corporate government will enhance State Owned Enterprises’ creditworthiness and attractiveness to investors by ensuring transparency, accountability, and financial discipline.

According to him, it enables access to external capital markets, reducing reliance on state subsidies.

He further explained that good corporate governance reduces the cost of capital by lowering perceived risks for investors and increases SOE valuations through efficient operations and credible reporting. This makes SOEs more competitive and attractive for investment.

“Governance reforms streamline resource allocation and management, improving productivity and profitability. Clear mandates, professional boards, and performance monitoring replace inefficiency with accountability.

“Robust governance minimizes the likelihood of financial crises, operational failures, or scandals by instituting checks and balances, audits, and transparent decision-making

“Beyond individual SOEs, good governance enhances national competitiveness, reduces fiscal burdens, and supports financial system stability by creating efficient, self-sustaining enterprises,” he added.