Nigerian Power Firms In Large Debt As Power Crisis Continues

Relief For Ogun, Lagos Traders As PHCN Restores Power Supply

The Amount of money owed to Nigerian banks by power sector operators rose by 12.83 percent to N861.14bn in December 2021 amid the sector’s lingering problems since its privatization over eight years ago.

In November 2013, the nation’s distribution and generation companies were privatized through the Bureau of Public Enterprises (BPE), fetching 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).

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

Power generation firms and independent power producers increased their total debt to N522.2bn in December 2021 from N443.37bn in December 2020, according to figures obtained from the CBN.

Transmission and distribution firms owed banks N338.94bn as of December 2021, up from N319.85bn a year earlier.

The crisis rocking Nigeria’s power sector seems to be developing annually 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.

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

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.

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