N152bn CBN power loan blocking our access to banks’ funds, DISCOs cry out

By Chris Ochayi

ABUJA—The Association of Nigerian Electricity Distributors ANED, has cried out that N152.16bn of the N201.61 billion Central Bank of Nigeria, CBN, fund, which is reflecting on accounts of Distribution Companies, DISCOs, was denying them access to commercial banks’ loans.

Barrister Sunday Olurotimi Oduntan, who is ANED’s Director of Research and Advocacy, explained via a statement in Abuja that the loan, tagged Nigeria Electricity Market Stabilization Fund, NEMSF, was to pay for gas and other legacy debts incurred before private investors took over PHCN assets on November 1, 2013.

He gave a breakdown which showed that only N58.45 billion (about 27.8 per cent) was designated for the DisCos, while the balance of N152.16bn (72.3 per cent) was for the Generation Companies (GenCos), gas suppliers and other service providers, which would be payable in bits during a 10 year period by the beneficiaries.

Oduntan said only N49 billion had been received by some DisCos out of the N120bn the CBN had disbursed since it commenced in 2015.

He, however, lamented that although the N152bn balance was not for the DisCos, the financial books of the electricity retailers bore the debt burden.

He said:  “The debt encumbrance is a significant impediment to the DisCos’ ability to borrow money to finance their capital investment, and their financing of the entire value chain.”

“It is a good first step towards resolving the market liquidity challenge and ensuring that the upstream operators are not financially distressed, but it is not a complete solution to the problem.

“As long as the retail end of the value chain continues to under-recover its cost, any possibility of the government recovering its intervention or fixing the ailments of the sector is an illusory one.”

ANED also said the outstanding market shortfalls of over N800 billion must be addressed urgently to ensure that the N701bn being given to NBET was  recovered from the GenCos.

Oduntan said the NBET fund might also be considered as government assistance to the sector to prevent any increase in tariff for Nigerians during the recession period, while putting the sector on the road to improved delivery services, sustainability and commercial viability.

 

 

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