Business

CBN steps in as Gencos, Discos moot blackout over govt’s N186.7bn debt

blackout

Panic and buck passing now trail threat of total blackout in Nigeria which may commence next week, following the refusal of government ministries, parastatals and agencies to settle a debt of $485 million (N186.7 billion) owed the power distribution and generating firms.

To avoid the situation, the CBN has promised to step in with a fresh loan of about N200 billion to the agencies to pay their outstanding bills.

After privatization of the power sector in 2013, the successful companies that emerged as generators (Gencos) and distributors (Discos) inherited about $250 million unsettled bills from the government agencies, namely the military, police and both federal and states ministries.

But the bill rose within two and half years by about 60 per cent by $235, a situation that has seen the companies repeatedly appealing to governments to effect payment, without result.

Rather, the Federal Government opted to offer loan in two tranches of N50 billion and N150 billion to be sourced abroad.

Read also: Missing N100m FAAN funds – EFCC collects top staff’s bank details

According to the firms, the loan approach is palliative but has not solved the problem of offsetting costs of generating and distributing power.

They have therefore threatened to switch off totally, pending when the various bills are settled.

If the companies make good their threat, most industries and residential homes will be in darkness except for those that rely on expensive generators.

The companies, which include Transcorp’s power subsidiary and Forte Oil’s power unit, said they are having some financial constraints repairing their networks because of imports of spare parts, which are dependent on scarce foreign currency.

The chronic power shortages are one of the biggest constraints on investment and growth in Africa’s largest economy where producing has been less than 4,000 megawatts for a population of over 170 million people.

After the privatisation, the government pledged to review tariffs as more power is generated and upgrade the transmission network to give more people access to the grid.

But tariff reviews have not kept pace with rising cost, worsened now by the naira devaluation.

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Ripples Nigeria

We are an online newspaper, very passionate about Nigerian politics, business and their leaders. We dig deeper, without borders and without fears.
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Ripples Nigeria

We are an online newspaper, very passionate about Nigerian politics, business and their leaders. We dig deeper, without borders and without fears.
www.ripplesnigeria.com

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