Transgrid Enerco Limited, a newly formed alliance comprising North South Power Company Limited (NSP), Axxela Limited, and the Stanbic IBTC Infrastructure Growth Fund (SIIF), has signed a share purchase agreement (SPA) to acquire a 60% equity stake in Eko Electricity Distribution Company (Eko DisCO), Nigeria’s second-largest electricity distribution company.
The SPA was signed today, January 21, 2025, with the transaction expected to be finalized by April 2025. Earlier reports this month indicated that West Power and Gas Ltd (WPG), the parent company of Eko DisCO, was nearing the sale of its entire stake after the consortium of North South Power, Axxela, and Stanbic Infrastructure Fund emerged as the winning bidders.
The bidding process for acquiring Eko DisCO began a year ago. While the exact financial details of the deal were not disclosed, it is believed to be valued at over $200 million, according to news reports. This acquisition is seen as a strategic move, particularly because two of the companies in the Transgrid Enerco consortium—NSP and Axxela Limited—are already established players in the energy sector. NSP, which owns Shiroro Dam, will gain direct control and insight into Eko DisCO’s operations, providing a clearer understanding of the company’s cash flow distribution.
Despite Eko DisCO meeting its remittance obligations to the market, the failure of other distribution companies (DisCOs) to do the same has resulted in power-generating companies like NSP not receiving full payments. This acquisition will allow NSP to better manage payment collections and potentially influence other DisCOs to adopt more efficient payment collection strategies.
The acquisition of a DisCO by an electricity-generating company is not unprecedented. In 2023, a Transcorp-led consortium, which owns the Ughelli Power Plant, acquired a 60% majority stake in Abuja DisCO. Similarly, Sahara Power, the owner of Egbin Power Plant, holds a 60% majority stake in Ikeja Electric. The consortium acquiring Eko DisCO is taking ownership from West Power and Gas Ltd (WPG). It remains to be seen whether the new owners will be able to address the challenges facing electricity distribution in Nigeria.
Charles Momoh, Chairman of WPG, stated in a press release;
Transgrid Enerco will, upon obtaining the relevant regulatory approvals, capitalize on the positive changes occurring within the fast-evolving Nigerian electricity market to reposition Eko DisCO to access new sources of capital.
As Nigeria continues to grapple with electricity issues, the market has opened up opportunities for startups focusing on renewable energy and mini-grid solutions.
