Power debt problems worsen as debt profile hits N30bn monthly

The problem of the electricity sector is getting compounded by the day as its debt profile hit N30 billion a month. This is even as operators said the total debt of the sector currently stands at N1.1 trillion as against N800 billion that government officials always claim.

This is coming on the heel of a disclosure by the chairman of Sahara Power group, Kola Adesina that electricity supply to Ikeja cantonment has been restricted to two hours a day by Ikeja Electric because of the debt the military formation is owing the company.

The operators who were unanimous over the debt revelation said drastic step must be taken by all stakeholders to save the industry from collapsing.

Aigbe Olotu, group chief Financial officer of Sahara Group who spoke at the first Sahara Power Roundtable, said that the actual shortfall in the power sector is now N1.1 trillion as against N800 billion being put across to the public by the government.

He said if actions are not taken the electricity sector may collapse, stressing that the government must step in to create the right investment climate that would support the sector to survive

According to him the Multi Year Tariff Order (MYTO ) may be criticised but it was established by law and operators relied on the law to invest believing that the law would be respected.

He said: “3-5 years into when the law was made the tariff has significantly fallen below the cost of generating electricity”.

Wale Oluwo, Lagos state commissioner for Energy Resources, said that the stakeholders in the power industry must focus on solution of the industry, adding that the cost of generations is not in tandem with the tariff

He said that states that can achieve cost reflective tariff should allowed to operate their own electricity system, stating that Nigeria is a federation and because of this all the states can be treated the same way.

The problem of the sector he said is structural and cannot be solve through administrative fiat

Evacuation of power is now very bad as the average technical and commercial and collection ATC&C loses is about 30 to 40 per cent. He said this is not good enough for the sector. This he said is not acceptable.

According to him more investment should be made in the distribution network so that electricity can get to the people

Also contributing to the discussion, Usman Gur Mohammed, managing director of Transmission Company of Nigeria (TCN) said that the company is beset by a lot of human and technical problems which his management is trying to resolve.

He said the there is need for investment in critical infrastructure to make the sector survive.

Kola Adesina who was talking on the efforts made to recover the debts owed by the federal government owed institution said that Ikeja electric is applying carrot and stick method to recover its money from such institutions and agencies. He said the company had to reduce power supply to Ikeja Cantonment because the military formation is owing it huge debt

Austin Avuru, managing director of Seplat Petroleum Development Company had said in early in the year at a conference in Lagos that generation companies (GenCos) owe domestic gas producers $350million annually, while DisCos owe the sector about $600million annually, due to insufficient revenue collection, making it difficult for more operators to invest in the sector.

Avuru said that GenCos owe domestic gas producers $350million annually, while DisCos owe the sector about $600million annually, due to insufficient revenue collection, making it difficult for more operators to invest in the sector.

Olusola BELLO