Stakeholders concerned about epileptic power supply
Electricity industry players are concerned about epileptic electricity and the fact that the energy crisis is not showing signs of improving. Investors and key stakeholders in the electricity sector have identified a disjointed alignment in the industry as continually causing misfires in efforts to resolve the lingering energy crisis.
The financial sector is already reeling from high indebtedness of distribution companies which, according to LEADERSHIP, was over N819 billion at the start of the year.
Some banks have recently made frantic efforts to take back 60% of the shares of certain electricity distribution companies (DisCos) from major investors for not having honored their debts.
Nearly a decade, no DisCo has declared a dividend after privatization and is buying power assets with loans, a misplaced priority according to some critics.
There are other key issues with N202 billion Government Ministries, Departments and Agencies, MDA debt, insecurity, theft, lax corporate governance pose new challenges
According to some investors, the tripod structure of the sectors value chain which includes generation, transmission and distribution works blindly in isolation and therefore causes a shock in the system.
They said that the weak structure of power companies, especially the 11 distribution companies (DisCos) and government-induced bottlenecks, have pushed the sector to its limits, to its ends and to its near-demise. end.
This has already led to the takeover of the assets of Ibadan Electricity Distribution Company (IBEDC) by the Asset Management Corporation of Nigeria (AMCON) due to loan default.
The company, confirming the takeover, however described it as obedience to a court order.
Integrated Energy Distribution and Marketing (IEDM) Limited, the lead investor in IBEDC and other investors, owns 60% of the utility company, while the government controls 40% of the shares.
The Nigerian Electricity Regulatory Commission (NERC) had previously fined IBEDC 50 million naira for failing to secure repayment of an interest-free loan that the IBEDC board had granted to its main group of investors.
The development came as the Abuja Electricity Distribution Company (AEDC), already taken over by the debt crisis, took another turn with the sacking of most top executives.
Currently, debt owed to banks by the power sector stands at around N819.97 billion last year. The National Bureau of Statistics (NBS) had, in 2020, assessed non-performing loans (NPLs) in the electricity sector at N33.22 billion out of N1.23 trillion recorded by banks.
This is why some stakeholders fear that the sector is facing an imminent collapse due to a myriad of challenges.
Speaking to reporters yesterday, they highlighted the severe shortage of foreign exchange in the country as a major challenge affecting the sector. According to them, this is due to the fact that almost all materials in the sector are purchased in foreign currencies, adding that the cost of maintaining their facilities is also in dollars.
“We barely get enough money to be able to meet the maintenance of our equipment and other obligations. This is one of the reasons why the sector has been facing all sorts of challenges and outages lately,” said the source who pleaded to remain anonymous.
The federal government explained last weekend that the fall in electricity production resulted from the partial shutdown of the Oben gas plant for the repair of critical gas processing equipment.
He had also revealed that the 14 reactivated Independent Power Plants (IPPs) across the country would produce 1,000 megawatts of off-grid electricity.
“We wish to inform the general public that the current drop in electricity production is the result of the partial shutdown of the Oben gas plant to accommodate the repair of critical gas processing equipment.
“The incident, unfortunately, happened at a time when other power plants on other gas sources are undergoing planned maintenance and capacity testing.
“We would like to inform the public that Seplat Energy Plc has mobilized equipment, materials and personnel to the site to expedite the restoration of normal gas supply to the affected power plants.
“We have been assured that the repair work will be completed this weekend and normality will be restored. While advocating with electricity consumers on the current state of supply, we wish to assure the general public that efforts are being made for a sustainable improvement in supply across the country,” the government explained.
The Manufacturers Association of Nigeria (MAN) recently called on federal governments to protect industries from collapsing due to the country’s erratic power supply.
MAN’s Kwara/Kogi branch chairman, Bioku Rahmon, has called for an accelerated rescue of players and investors from the impending orgy of unemployment and mass business shutdowns that are imminent due to the energy crisis.
He expressed concern that the manufacturing industry has not yet fully recovered from the monumental bottlenecks caused by the COVID-19 pandemic, while describing the continuing energy crisis as the exact antithesis of what the industry cannot contain at this time.
He lamented that the electricity produced from the national grid has not registered any improvement and is hampering the activities of manufacturers.
“Currency scarcity has worsened significantly, even as industry players continue to experience a significant and growing contraction in FX windows. This has led to major slowdowns and tensions in buying and acquiring of foreign components for production,” MAN said.