Power Firms Worry Over N700b Loan

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Power distribution companies (DisCos) are worried that the N700 billion Federal Government’s loan may not be able to meet their obligations, The Nation has learnt.

This fear is as a result of the prevailing foreign exchange rate, which has led to rising cost of production and the chaotic state of the nation’s economy. The firms said the loan would help them to reduce their shortfalls, urging the government to offer similar assistance to other operators in the value chain.

The Association of Nigerian Electricity Distributors (ANED) Director of Research, Mr. Sunday Oduntan, said due to the bad economy, the firms may not be able to  record much growth with the money. He said, though the loan would help in reducing the operational losses of the power firms, it cannot guarantee them optimum production.

He urged the government to provide lifeline to operators in the upstream, midstream, downstream, and others in the value chain, in order to develop the oil and gas sector.

Oduntan said: “The energy distribution companies are happy with the N700 billlion loan. However, the money cannot solve the problems facing the power firms. The DisCos are experiencing dearth of infrastructure caused by lack of liquidity in the industry. There are problems such as weak and obsolete transmission/distribution equipment, shortage of gas, meters, transformers and others.

“The lull in activities in the petroleum industry is due to low engagements in the exploration and production (E&P) segment of the oil and gas sector. Therefore, extending such lifeline to E&P players will go a long way to boost gas supply to the thermal power plants and electricity supply. That is why the government needs to enhance the growth of the oil and gas industry by giving loans to the operators.”

Oduntan said the N700 billion facilities and the over N1 trillion debts owed the power firms by the Ministries, Departments and Agencies (MDAs) of government are not the same. “The MDAs are yet to pay more than N1 trillion, which they owe the power distribution companies. The debts and the loan are two different issues and should not be construed to mean the same thing. The loan is being given to compensate for debts, he said.

He said the decision by ANED and its members to keep silent on the issue of debts should not be mistaken for stupidity, stressing that the idea was to foster peace in the country. According to him, many stakeholders are peddling rumours about the state of the sector including the debts owed the DisCos, among other issues.

Oduntan said the problems in the sector are enough for the operators to contend with, adding that it would amount to waste of efforts if the operators engage in counter accusations with those accusing them of poor operation.

The sector is yet to record any meaningful growth since 2013 when it was sold to the investors in the private sector. Instead, the industry has been facing problems such as poor generation, supply of electricity, shortage of meters, huge debts, among others. The sector recorded 2,500 megawatts (Mw) of electricity in the first quarter of 2017, the lowest ever in recent times. To improve power supply, the Federal Government advocated for energy mix, a development, which ensures that the country uses both on-grid and off-grid methods of generating electricity for growth.

Source: The Nation

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