Nigeria’s power sector’s liquidity shortfall hits N1.1 trillion
Investors in Nigeria’s power sector have put the liquidity shortfall, which are inimical to business growth at N1.1 trillion.
According to them, the liquidity crisis is growing by N30 billion every month.
They stressed the need for the Federal Government to introduce cost reflective tariff to enable investors recoup their investments and get more loans from banks for capital projects.
According to them, the electricity firms have the responsibility to deliver service to the consumers while government has the responsibility to play the effective role of regulation.
Speaking at the Sahara Energy Power Round Table in Lagos yesterday, Group Head, Finance, Sahara Group Limited, Aigbe Olotu, said that the power sector is at the edge of collapse as the liquidity situation has continued to soar.
Olotu said: “The Nigerian banks no longer have the appetite to support the power sector. There is no bank today that is ready to grant you audience when you take a power project proposal them due to the huge liquidity crises in the sector. Unless something is done urgently, the power sector may just collapse one day.”
The Group Managing Director of Sahara Power Group, Kola Adesina, said that Sahara Group has plans to expand generation capacity at Egbin Power Plc. to over 5,000 Mega Watts (mw) by 2023.
To achieve this, he emphasised the need for the country to have effective transmission and distribution scheme in the entire value chain.
The gaps in the value chain, he said, was making it difficult for the power sector to realize its potentials, beginning with the gas suppliers, through the generation, transmission and distribution companies.
He said that Egbin Power Plc, with installed capacity of 1,320mw has only been able to deliver between 500mw due to inadequate transmission and distribution facilities.
“Out target is to double the existing capacity in the near future through the development of Egbin Phase 11, but all the players in the value chain need to be effective. Egbin has the potential to supply up t 15 per cent of the current national power generating capacity if there is a smooth operation in the value chain,” he added.
On the role of tariff the development of the energy sector, Adesina said that the multi-year tariff order, which does not allow the operators to charge cost-reflective tariffs, has prevented the generation companies from recovering costs of investment in the development of gas fields, gas supply infrastructure, importation of machines and spare parts used in generating electricity.
“The day the tariff is lower than the cost of production in the entire value chain, failure begins to set in. That is the position we have today in the Nigerian power sector.”
Speaking on consumers’ right, the President/Founder, Consumer Advocacy Foundation of Nigeria, Ms. Sola Salako, urged the electricity distribution companies to provide pre-paid meters to tackle the issue of over-estimated billings in the sector.
According to her, consumers are resisting payment of bills due to the exorbitant bills from the utility companies irrespective of inadequate electricity. “Consumers have to right to ask for pre-paid meters. Provision of pre-paid meters to consumers will enhance payment of electricity bills by the consumer.
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