Power sector stakeholders applaud FG’s decision to pay-off N100bn debt

Stakeholders in the power sector say the decision of the Federal Government to settle over N100 billion currently owed by government ministries and departments will go a long way to address the liquidity challenges experienced in the sector.
President Mohammadu Buhari, in his budget presentation speech at the National Assembly on December 14, said power was a priority sector for the government in 2017.
“During 2016, we conducted a critical assessment of the power sector value chain, which is experiencing major funding issues. Although government, through the Central Bank of Nigeria (CBN) and other Development Finance Institutions, has intervened, it is clear that more capital is needed. We must also resolve the problems of liquidity in the sector.
“On its part, government has made provisions in its 2017 Budget to clear its outstanding electricity bills. This, we hope, will provide the much needed liquidity injection to support the investors,” the president said.
Sunday Oduntan, executive secretary, Association of Electricity Distributors, told BusinessDay that the plan was good for the sector, as it would help reduce the shortfall in the sector.
“We are glad, it’s a good decision and it will help reduce the shortfall in the sector and it will have good impact on the sector,” he Odutan.
Besides the N100 billion MDAs debt, Odutan said currently, the shortfall in the sector was about N809 billion and that government was partly responsible through regulatory inadequacies and foreign exchange problem.
Chuks Nwani, an energy lawyer, said the move was a positive development for the sector, as it would help address the liquidity challenges in the sector. “I think the move is a positive development for the sector because none of the discos are currently liquid.”
He further said, “When they try to collect debts from the military, the officials get beaten up, so the best way for government to address this situation is to pay and directly debit from their accounts, which is what I think the government will do.”
The discos that bear the brunt of collection losses also see the move as a positive development.
“It will indeed be a huge relief,” Ahmed Shekarau, spokesman of Abuja disco, said.
Shekarau added, “Abuja being the seat of power, has the highest concentration of government offices and officials and also the highest debt from the government MDA’s. We are owed about N22 billion and this has impacted on our services but if this debt is paid, we will have the capacity to improve our services – provide meters, address other challenges.”