Another crisis is brewing in the power sector, as the supervising ministry directs the Nigerian Electricity Regulatory Commission (NERC) to set a minimum recapitalisation base for both generating and distributing companies operating in the sector, before the end of the second quarter.
Confirming this to newsmen in Osogbo, Osun State, at the 14th Power Sector Stakeholders’ meeting on Tuesday, the NERC Vice Chairman, Sanusi Garba, said the need to ensure that only serious companies are in the sector had made it imperative to have them acquire the financial muscle to operate efficiently.
He quoted the Minister of Power, Works and Housing, Mr. Babatunde Fashola, as having given his blessing to the new directive.
It would be recalled that in March 2017, both Discos and Gencos were at each other’s throats over unsettled bills, an issue yet to be addressed.
But the new recapitalisation plan has already been kicked against by the operators, who see it as part of government insensitivity in challenges, affecting their performance.
The Association of Nigeria Electricity Distributors (ANED), frowned at the order, saying it only proves that government is not attending to the mirage of issues its members have been tabling before it.
It mentioned, especially, the non settlement of bills by both government agencies and individual power consumers, running into several billions of naira, as one of such problems.
“To us, NERC, as a regulatory agency is not representing all stakeholders’ interests”, CEO of one of the Discos at the meeting told journalists on condition of anonymity.
However, NERC disclosed that it had already identified capital inadequacy on the part of the operators as the bane in the expected rise in output of services.
Garba said after three years of operating, the companies that succeeded the defunct Power Holding Company of Nigeria had been performing on colossal losses, thus necessitating the need to set a minimum capital base for the investors.
On what the minimum capital base would be, the NERC Vice Chairman said details will be made public soon, adding that details were being worked out with the operators involved.
He further stated: “Looking at the audited accounts we have received so far, the capital base of these companies had been grossly eroded.
“Therefore, we have started working and evaluating the minimum capitalisation that will be required to make sure that our licensees have the required resources to do what they need to do.”
On the alleged NERC indifference on how the Discos could recover over N50 billion debts owed them by government over unsettled bills, Garba promised that it was being looked into, and that it would be will be settled soon.
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