The umbrella body of the 11 electricity distribution companies (Discos), Association of Nigerian Electricity Distributors (ANED) has said about N152.16billion of the N201.61billion Central Bank of Nigeria (CBN) loan reflecting on Distribution Companies (Discos) accounts, has blocked access to funding from commercial banks.
This was disclosed by ANED’s director of research and advocacy, Barrister Sunday Olurotimi Oduntan, in Abuja.
According to him, the loan tagged, Nigeria Electricity Market Stabilisation Fund (NEMSF) was to pay for gas and other legacy debts incurred before private investors took over PHCN assets on November 1, 2013.
The breakdown shows that only N58.45bn (about 27.8 per cent) was designated for the DisCos while the balance of N152.16billion (72.3 per cent) was for the Generation Companies (GenCos), gas suppliers and other service providers. It would be payable in bits during a 10 year period by the beneficiaries.
Oduntan said only N49 billion has 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 bear the debt burden.
“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,” Oduntan explained in a statement.
On another N701.9bn the CBN assigned to Nigeria Bulk Electricity Trading Plc (NBET) recently to pay the GenCos from January 2017 to 2019, the DisCos’ group said if the retail end is not considered, the fund may not sustain the electricity market.
Oduntan said: “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,” he noted.
ANED also said the outstanding market shortfalls of over N800bn must be addressed urgently to ensure that the N701bn being given to NBET could be recovered from the GenCos.
Oduntan said the NBET fund may 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.”