Power firms’ debt make more outages likely if they default in repayment
By Jeph Ajobaju, Chief Copy Editor
Banks are owed N836.08 billion by power generation companies (GenCos) and distribution companies (DisCos), a debt accumulated since privatisation in the sector in 2013, according the Central Bank of Nigeria (CBN).
Default in loan repayment may cause disruption in their operations and lead to more power cuts.
CBN data for June 2022 just released show GenCos and independent power producers (IPP) owe banks N562.19 billion and power transmission firms and DisCos N273.89 billion.
Core investors in DisCos are looking to restructure loans given to them by banks to acquire power assets.
Eleven GenCos fetched $1.5 billion and six Discos $1.7 billion for the treasury when the Bureau of Public Enterprises (BPE) privatised them in 2013 after they were unbundled from the defunct Power Holding Company of Nigeria (PHCN).
Core investors financed the acquisitions mostly through loans, a significant portion of which was provided by local banks.
The PUNCH reports that the crisis in the power sector is expanding despite efforts by the government and the private sector to manage it.
From power generation to transmission down to distribution, there are diverse concerns, as well as in other areas of the industry, such as regulation.
Stakeholders say the recent joint takeover of some DisCos by a bank, the Asset Management Corporation of Nigeria (AMCON), and another investor, shows that all is not well with the DisCos.
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Complex debt situation
“The situation is more complex than the ordinary person sees. The entire experiment may not be yielding the desired results; that is the frank truth,” Chris Akamnonu, who served 13 years as Managing Director of three Discos in the South East and South West, told The PUNCH.
It was reported in July that the BPE, AMCON, and Fidelity Bank took over the management of five DisCos over debt owed Fidelity Bank.
The companies are Kano Electricity Distribution Company, Ibadan Electricity Distribution Company, Benin Electricity Distribution Company, Kaduna Electric, and Port Harcourt Electricity Distribution Company.
They reportedly failed to repay loans obtained for assets acquired in the 2013 privatisation exercise.
