The Central Bank of Nigeria (CBN) has affirmed that the total debt owed Nigerian banks by power sector operators has risen by 12.83% in one year to N861.14billion as at the end of 2021.
In November 2013, Nigeria subjected its power sector to privatization, creating distribution and generation companies, as well as supervisory agencies through the Bureau of Public Enterprises (BPE).
The exercise, as shaky and uncertain as it was, fetched the country about $3.2billion from the distribution (Discos) and generation (Gencos) in the ratio of $1.7billion and $1.5billion, respectively.
In all, six successor power generation companies and 11 distribution firms were unbundled from the defunct Power Holding Company of Nigeria (PHCN) in the privatization exercise.
The $3.2billion realized from the core investors of the Discos and Gencos, it was realized later, came mostly by debts, a significant portion of which was provided by local banks.
But by July 2020, the power companies started displaying distress signs, complaining that they were short changed. Soon, the core investors in the Discos and Gencos called for the restructuring of the loans advanced to them by banks for the acquisition of the power assets.
At the end of the day, the power generation firms and independent power producers reportedly increased their total indebtedness to N522.2billion in December 2021 from N443.37billion in December 2020, according to the CBN sources.
From power generation to transmission down to distribution, there have been diverse concerns, as well as in other arms of the business such as in the regulation of the industry.
These concerns have made stakeholders express doubt over the viability of the privatisation of the distribution and generation arms of the industry over eight years ago, which has yet to impact considerably on Nigerians.
They stated that the recent takeover or re-acquisition of some power distribution companies by a deposit money bank, the Asset Management Corporation of Nigeria (AMCON) and another investor, for instance, showed that all was not well with the Discos.
Chris Akamnonu, who served as managing director in three Discos in the South-East and South-West for about 13 years, said, “The situation is more complex than the ordinary person sees. The entire experiment may not be yielding the desired results; that is the frank truth.”