Discos indebtedness threatens power generation capacity

The relative improvement of power supply in Nigeria in the past one month may soon be hampered if the federal government fails to assist the power distribution companies (Discos) to pay$325 million and $1.25 billion debts they owe local and foreign institutions respectively.

Most of the loans were secured to put the Egbin Power station and Kainji Dam back to use, which have contributed in boosting power supply to 3.73 MW from 2.5 MW.

But sources said the creditor-banks had already approached the Discos to lodge in the first tranche of the loan servicing payment before the end of September, failure of which they would resort to legal process.

However, Chief Executive Officer, the Egbin Power Limited, Dallas Peavey Jr., was quoted as having assured the banks that efforts were being made to have government meet its obligation on the sector.

Peavey also regretted that at the time acquiring the loans, the exchange rate was N150 per dollar, but had since doubled, which means the companies would be paying almost double of what they owe the banks.

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Having raised capital from banks, he said that the company is now faced with the harsh reality of paying back in time of economic downturn, adding that the huge debts had put the discos in cash liquidity crisis that had reduced its ability to pay for gas supplies, and hence threatens to completely undermined the electricity value chain and ability to continue to serve customers.

Though he hinged his hopes on the promise by the Minister of Power, Works and Housing, Babatunde Fashola, that government would settle the over N100 billon electricity bills owed by its agencies and departments, banks officials said there would be no more concession to be extended to the companies on the grounds that the Nigerian Central Bank was not ready to give any breather to the banks over the loans.

Another major challenge facing the electricityoperators is the scarcity of gas to service the rest four plants in the country, which is made so due to militants’ activities, which had seen to the blowing up of some oil facilities.

 

 

 

 

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