The Ministry of Finance Incorporated MOFI has begun the restructuring of Federal Government assets with the assumption of ownership, control and management of all outstanding Federal Government of Nigeria (FGN) equity in all existing electricity successor companies from the defunct Power Holding Company of Nigeria PHCN.
Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun recently issued an Order to the Board of Directors of MOFI to terminate the Power of Attorney (POA) granted by MOFI to the Bureau of Public Enterprises (BPE) in 2012 and takeover the stakes in the 11 Power Distribution Companies (DISCOs).
MOFI is a statutory corporation-sole established by the MOFI Act, 1959 (“the Act”). The legislative intendment of the MOFI Act was and remains that the corporation is constituted as the holder and manager of all assets acquired by way of debt or equity capital from the funds of the FGN. MOFI in a statement notes that these assets include the investments in the defunct National Electric Power Authority; which, under the repealed Electric Power Sector Reform Act, 2005 (EPSRA), evolved into Power Holding Company of Nigeria Plc and subsequently unbundled into the various electricity “successor companies”, including the eleven distribution companies (Discos).
The statement further added that acting under the Public Enterprises (Privatisation and Commercialisation Act) (“the NCP Act”), 1999, the National Council on Privatisation (NCP), decided in 2011 that the privatization of the electricity successor companies would be by sale of shares. At the time, Nigerian company law did not provide for a single shareholder company hence it was legally impossible for MOFI to be the sole holder of the shareholding of the Federal Government. This made it necessary that a second entity hold the shares in addition to MOFI and in this case the Bureau for Public Enterprises BPE. As the secretariat of the NCP, BPE was the statutory entity tasked to provide support to MOFI in giving effect to the NCP’s decision. Thus, in 2012, MOFI issued a Power of Attorney to the agency whereby BPE was empowered to carry out the actions necessary to fulfil the NCP’s directives and complete the various electricity privatisation (share sale) transactions.
BPE had since then held shares in the Discos on behalf of MOFI and this continued for over 10 years after the sales were completed in 2013, until the recent Order by the Minister of Finance Mr Edun.
Since the amendment of the MOFI Act by the Finance Act, 2023, MOFI has been reformed and restructured from a Unit in the Office of the Accountant-General to a full-fledged public sector (FGN) asset management corporation within the last two years.
The action is in recognition that Federal Government assets across practically all economic sectors nominally valued at very significant sums were largely moribund or grossly underutilized and poorly managed. Consequently, it was determined in 2021 by the then Minister of Finance, amongst other relevant decisions, that MOFI would adopt a new, value-driven strategic direction in aggregating and managing FGN assets. This includes its restructuring and repositioning as an active asset management corporation; development of a strategy for creating a National Assets Register that aggregates and profiles all national assets and investments; development and implementation of policies and regulations that ensure the creation and management of assets from debt-related transactions; development and implementation of policies and regulations that ensure creation and management of assets from concession-related transactions; and the creation of a robust pipeline of Federal Government-owned and Federal Government-linked investment opportunities.
The process of reform and restructuring leads to the consolidation and assumption of the ownership rights of MOFI’s shareholdings across various asset classes. MOFI’s resumption of its rights of management of the FG’s 40% shareholding in the eleven electricity distribution companies and the various equity stakes in related energy sector companies is an essential element of this consolidation to drive operating efficiency, best corporate governance practices and ultimately maximise the value derived from these electricity assets, in alignment with President Bola Ahmed Tinubu’s economic growth agenda.
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