Businesses in Nigeria’s power sector especially operators of generation and distribution companies might be forced to close shop in the face of huge losses they have encountered since the power sector was privatised.
Group Leader, Generation at Sahara Power Group, Engr. Michael Uzoigwe, who stated this in Lagos, said investors in the power sector were yet to recoup their investment, including borrowed and personal fund, three years after privatisation.
“The Nigerian power system is presently in trouble and if care is not taken, the business will shut down in six months time. Quote me on this. This is because those in the business have lost their investments. They have invested billions and keep borrowing yet, their monies can’t be recouped not to mention of making profit,” he said.
Another reason why GENCOs and DISCOs might shut down in the next six month, Engr. Uzoigwe said, is the cost of gas and purchase of spare parts for power plants.
According to him, gas which is abundant in Nigeria and produced in-country is being sold to generation companies in dollar which he described as unsustainable due to the current exchange rate and policy.
He warned that GENCOs and DISCOs can not break even based on the current price of gas, adding that these companies were also battling with the price of spare parts which are being imported into the country.
“Gas is being sold to generation companies in dollar and these companies cannot break even with the current dollar price couple with the scarcity of foreign exchange.
“Scarcity of foreign exchange has not enabled generation companies to buy spare parts for their power plant. This means that these plants cannot be maintained,” he said.