Power firms groan as forex crisis hits hard on investments

The lingering exchange rate parity may have hit hard on the power sector investors, as indications emerged that some projects are currently in the trap while the operators adopt austerity measures as survival strategy.

Specifically, The Guardian gathered that sourcing of electrical equipment offshore Nigeria are now eating deep into the investors purse, with cost of purchasing materials soaring up by about N100 per cent.

A source in Ikeja Electric told The Guardian recently that the company is presently groaning under the foreign exchange pressure following the hike in price of materials especially those that are sourced from the international market.

According to the source, the company is presently adopting austerity measures in its operations and therefore cutting off every avoidable expenses.

This may not be unconnected with the sacking of about 400 workers of the company recently, but the Head, Corporate Communications, Ikeja Electric, Felix Ofulue, said the objectives was to create a high performing organization, which satisfies the needs of stakeholders, as it reposition for growth.

The Chairman Egbin Power Plc, Kola Adesina, recently revealed that the foreign exchange rate crisis has deeply affected operations of the power firms.

According to him, all the electricity value chain need massive investment, but the recent experience is posing a setback in that area, considering the fact that dollar rate was N157 as at the time of signing the Power Purchase Agreement in 2013.

Adesina said: “The exchange rate was N157 to a dollar at the point of purchase. There is need for us to have forex to support what we needed. We are earning naira and we are spending dollar. If you say that exchange rate is N197 and we cannot get it even when we are ready to pay more, then you it becomes more worrisome.

“For more than one year, one of my units in Egbin has been shut down, I can’t secure forex to implement the overhauling programme,” he said.