Thursday, 20 December 2012

PHCN Privatization: Senator warns against asset-stripping

The Chairman, Senate Committee on Power, Senator Phillip Aduda, has urged the Federal Government to prevent investors from stripping electricity firms’ assets when the companies are finally sold.
Aduda, gave the advice while commenting on the progress made in the power sector at a stakeholders’ forum in Lagos. He urged the regulator of the sector — Nigerian Electricity Regulatory Commission and other agencies playing supervisory roles — to adequately monitor happenings in the sector to avoid cases of asset-stripping.
Asset-stripping is the sale of selected assets of an acquired company generally for the purpose of raising money to pay off some of the debt incurred in financing the acquisition. It is also the process of buying an undervalued company with the intent to sell off its assets for a profit. The individual assets of the company, such as its equipment and property, may be more valuable than the company as a whole due to such factors as poor management or poor economic conditions. Asset-stripping could also take the form of buying a company, and then selling off businesses it owns separately.

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