Electricity Companies Owe Banks N861.14 Billion as Crisis in Sector Persists

Electricity Companies Owe Banks N861.14 Billion as Crisis in Sector Persists

  • Electricity companies are said to owe banks in Nigeria about N861.14 billion, which is an increase of 12.83 per cent
  • Nigeria's power sector was privatised in 2013, eight years ago when the national Power Holding Company was unbundled
  • The privatisation fetched the country over $3 billion but has not made any significant improvements, leaving investors doubting the process

Electricity operators in Nigeria are indebted to banks to the tune of N861.14 billion, representing an increase of 12.83 per cent as of December 2021.

According to The Punch, in 2020, core investors in the power sector were asking banks to restructure the loans given to them by banks for the purchase of power assets.

Electricity Companies, Banks N861.14, PHCN
Electricity companies owe Banks N861bn Credit: Robert Brook
Source: Getty Images

Privatisation yields no required results

Nigeria’s power sector was privatised in 2013 via the Bureau of Public Enterprise, which got the Nigerian government about $3.2 billion.

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The defunct Power Holding Company of Nigeria (PHCN) was unbundled to produce 11 power distribution companies in the country.

The purchase by major investors was financed by debts primarily, the majority of which came from the local banks.

Increasing bank debts plague sector

Power generating firms and independent power providers increased their total debt to N522.2 billion in December 2021 from N443.37 billion in December 2020, according to figures obtained from the Central Bank of Nigeria (CBN).

Transmission and distribution companies are indebted to banks to the tune of 338.94 billion as of December 2021, an increase from N319.85 billion from the previous year.

Analysts have raised concerns about the ongoing problems plaguing the power sector over the years, saying there is a vacuum in the regulation of the industry.

Stakeholders are becoming doubtful of the privatisation process of the industry in the last eight years.

Despite heavy investments, Nigeria now generates 3,900 megawatts of electricity

Legit.ng has reported that Nigeria now generates about 3,904 megawatts of electricity for its over 200 million population.

On Tuesday, April 12, 2022, the ministry of power said the current power generation is a marginal improvement, bringing it to 86,760.88MWH.

Power generation stood at 3,904MW as of Tuesday, April 12. 2022 before dropping by 1.96 per cent compared to 3,982.8MW recorded on Monday, April 11, 2022, a Nairametritcs report said.

Source: Legit.ng

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