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Barely two weeks after the Minister of Finance, Mrs Zainab Ahmed met with officials of the World Bank for $1bn power sector revival loan at the Spring Meeting of the bank and IMF in New York, the Managing Director/Chief Executive Officer, Transmission Company of Nigeria (TCN), Engr Usman Gur Mohammed, has described Gencos and Discos as not only technically bankrupt, but a serial bottomless pit.
Gencos are electricity generation companies while Discos are electricity distribution companies and both are products of 2013 unbundling and privatisation of former Power Holding Company of Nigeria (PHCN).
Whereas both Discos and Gencos are in the hands of private sector, the TCN aspect of Nigeria power arrangements are exclusively in the hands of the Federal Government with the mandate of managing the national grid.
While the World Bank continue to weigh the government proposal for the $1bn loan to again, pump into the power sector, a review of the interventions so far made by the government in the sector Business Hilights showed that even the injection of the expected $1bn from World Bank may go the way of previous interventions.
Without any form of probe on insinuations in some quarters that during the administration of former President Olusegun Obasanjo, well over $16bn were drained all for the revival of the nation’s power sector with limited results after all, in September 2014, the Central Bank of Nigeria (CBN) introduced a N213bn intervention fund, a loan facility with a 10-year repayment period, to assist the Gencos and Discos to settle legacy gas debts, execute agreed metering and maintenance programmes, and finance procurement of transformers and other equipment
As if that was not enough to give desired results, the same government in March 2017, unveiled the Power Sector Recovery Programme (PSRP) driven by the CBN-funded Payment Assurance Guarantee for two years to the tune of N701bn.
The fund, which is expected to cover the shortfalls of the Nigeria Bulk Electricity Trading Plc, is targeted at Gencos and gas suppliers for power generated and future power generation, and in isolation, will cover N300bn in existing liabilities.
On the planned World Bank loan, the Federal Government is yet to explain to Nigeria what it intends to do with the money. Whether it wishes to borrow and share amongst Discos and Gencos which remains purely private businesses which ordinarily should be given a time frame to either recapitalise in line with the agreed terms and conditions of the privatisation or give way for fresh and transparent reprivatisation that will bring in genuine investors with deep pockets to right the wrongs in the power sector.
This argument is based on the fact that upon the double interventions, checks in the sector show that the expected results have remained elusive, thus confirming last week’s revelation of the TCN boss at the interactive forum on eligible customer regulations (ECR) organised by the Manufacturers Association of Nigeria (MAN) in Lagos.
Giving fresh insights at the ECR in Lagos, Mohammed was down to earth when he averred that “We should be worried as Nigerians because we are creating another deep hole in the power sector. This is worrisome for an industry that is privatised; the government is putting this money in the sector because we have electricity companies that are weak.”
Continuing, he decried that “What we have now is that we have technically bankrupt companies that cannot stand on their own and government is supporting them, which does not make sense.”
Though TCN boss was silent on the need or otherwise for the $1bn loan, several industry experts have continued to advise against the loan on the ground that it will go the way of previous interventions that failed to yield any meaningful results. In their submission, the best bet to resuscitate the ailing power sector is to recapitalise Gencos and Discos as many of them are not only technically bankrupt, but financial insolvent.
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