Generation Companies (GENCOs) and Distribution Companies (DISCos) owe Nigerian banks N836.09bn as crisis continue to rock the power sector following its privatisation in 2014.
The debt profile of the power companies was revealed by the Central Bank of Nigeria in June 2022
While power generation firms and independent power producers owed banks N562.19bn, power transmission and distribution firms were indebted to the tune of N273.89bn.
Nigeria’s distribution and generation companies were privatised in November 2013 through the Bureau of Public Enterprises, generating about $3.2bn for the federal government. The GENCOs and DISCOs were sold for $1.5bn and $1.7bn.
The Nigerian government privatised the six successor power generation companies and 11 distribution firms that were unbundled from the defunct Power Holding Company of Nigeria.
The acquisitions by the core investors were financed mostly by loans provided by local banks but mismanagement and poor accountability has plunged both the GENCOs and DISCOs into huge debt.
From power generation to transmission to distribution, there have been diverse concerns, as well as in other arms of the business such as in the regulation of the industry.
These concerns have made stakeholders express doubts over the viability of the privatisation of the distribution and generation arms of the industry.
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, “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,” he told Punch Newspaper.
Chronicle NG reported that United Bank for Africa (UBA) eight months ago took over Abuja Eletricity Distribution Comapny (AEDC) from KANN Consortium after it failed to service the debt owed the financial institution.
Similarly, the Nigerian government, through BPE took over Ibadan DISCO. BPE obtained approval from the Nigerian Electricity Regulatory Commission to appoint an interim managing director for the distressed power firm.
In July 2022, it was reported that the federal government alongside Fidelity Bank and AMCON had taken over the affairs of five electricity distribution companies, also known as DISCOs, over debts owed to Fidelity Bank.
The affected companies were Kano Electricity Distribution Company, Ibadan Electricity Distribution Company, Benin Electricity Distribution Company, Kaduna Electric, and Port Harcourt Electricity Distribution Company.
The companies had failed to repay loans obtained to pay for assets acquired in the 2013 privatisation exercise.