For the survival of the power generation and distribution companies in Nigeria, the Federal Government need to urgently inject N1.23tn into the GenCos and DisCos, the Country Representative of Energy Market and Rate Consultants, Rahila Thomas, has said.
Recall that GenCos and DisCos had threatened to shut down their operations resulting in a nationwide blackout should the federal government continue to turn its face against their plight.
Spoking at a one-day roundtable discussion organised by the Senate at the Nigerian Air Force Conference Centre, Abuja, the EMR boss said the sector was bedevilled with myriad of problems.
According to her, the development has put investors into huge debts and has broken down trust in the entire value chain.
She said: “Issues bedevilling the power industry in Nigeria started with fatal flaws inherent in the 2013 privatisation anchored on wrong assumptions.
“This inhibited investors from taking care of their loses let alone delivering on the required electricity supply in the country.
“The fatal flaws or wrong assumptions upon which the privatisation was carried out in 2013 have to do with generation capacity government put at 6,500 megawatts.
“It later turned out to be 3,453MW. Assumptions in the loss for every naira of kilowatts put at 21kobo but later turned out to be 52 kobo loss per every naira of kilowatts with attendant unanticipated loses totalling far above a trillion naira now,” she said.
She lamented further that an unbearable loss in the sector by investors arose from subsidies promised on yearly basis by government on the 21 kobo loss per one-naira kilowatts.
Mrs Thomas said this later increased to 52 kobo loss per naira kilowatts without required subsidy payments by government.
She said, “Even the N600bn reported to have been put on the table for the sector this year has not been accessed by investors 21 days to the end of the year.
“Another factor is that of Forex because exchange rate of a Naira to a US dollar as of November 2013 when the sector was privatised was N157 but now between N350 to N360.
“Liquidity is the key problem in the sector due to unattractive investments in the Industry.”
She, however, said that the country has the capacity to improve the generation capacity from the 4,000 megawatts it is now to the projected 7,000, 11,000 and 25,000 megawatts in years to come if the prevailing challenges are adequately addressed.