Nigerian Power Firms Owe Banks N861bn As Crisis In Sector Continues

Power sector operators’ debt to the Nigerian banks has increased by 12.83 percent in one year to N861.14bn in December 2021 amid the sector’s lingering problems since its privatization over eight years ago, a data released by the Central Bank of Nigeria has revealed.

Gatekeepers News reports that the nation’s distribution and generation companies were privatized through the Bureau of Public Enterprises (BPE) in November 2013 which raked in about $3.2bn for the Federal Government, as the Discos and Gencos were sold for $1.7bn and $1.5bn, respectively.

The Federal Government officially privatized the six successor power generation companies and 11 distribution firms that were unbundled from the defunct Power Holding Company of Nigeria (PHCN).

PUNCH reports that the acquisitions by the core investors were financed mostly by debts, a significant portion of which was provided by local banks.

According to the apex bank data, power generation firms and independent power producers increased their total debt to N522.2bn in December 2021 from N443.37bn in December 2020. While the transmission and distribution firms owed banks N338.94bn as of December 2021, up from N319.85bn a year earlier.

It appears that the crisis in the power sector continues to increase despite efforts by the Federal Government and the private sector to manage it. From power generation to transmission down to distribution, there have been diverse concerns and other arms of the business, such as in the regulation of the industry, according to a report by the PUNCH.

It stated that the concerns have made stakeholders express doubt over the viability of the privatisation of the distribution and generation arms of the industry over eight years ago, which has yet to impact considerably on Nigerians.

According to the news media, they stated that the recent takeover or re-acquisition of some power distribution companies by a Deposit Money Bank, the Asset Management Corporation of Nigeria and another investor, for instance, showed that all was not well with the Discos.

Chris Akamnonu, who served as managing director in three Discos in the South-East and South-West for about 13 years, told the PUNCH, “The situation is more complex than the ordinary person sees. The entire experiment may not be yielding the desired results; that is the frank truth.”