Considering observed failures and poor growth in the power sector, the Nigerian Electricity Regulatory Commission (NERC), will soon rollout new recapitalization guidelines that must be met by prospective investors in the power sector.
Having indentified paucity of fund as a major setback in the industry, the Commission recalled that successor companies of the Power Holding Company of Nigeria (PHCN) were handed over to the core investors without any liability.
It therefore decried that after three years of operations, successor companies have failed in their expected level of investments needed to drive the sector.
Vice Chairman of NERC, Sanusi Garba opened up on the new drive during the 14th Power Sector Stakeholders’ meeting presided by the Minister of Power, Works and Housing, Babatunde Fashola, at the National Control Centre, Power Line, Oshogbo, Osun State.
Though he was silent on likely capitalization limit NERC is looking at, he noted that “Another issue that I will like to bring to the attention of our sector stakeholders is the issue of capital adequacy. At the time of privatisation, these PHCN successor companies were handed over to core investors without any liability. But operating them over the past three years, there have been colossal losses.
“We have a feeling, looking at the audited accounts we have received so far, that the capital base of these companies had been grossly eroded. Therefore, we have started working and evaluating the minimum capitalisation that will be required to make sure that our licensees have the required resources to do what they need to do.”
According to him “within the next few weeks, the necessary consultation will begin, and will direct the core investors to meet the new minimum capital so that they will be able to do the required investments, reinforcements and service delivery that consumers need throughout the country”.