Why skepticism trail FG’s N72bn planned largess to DISCOs
Like in previous occasions, the Federal government through it foot soldiers Babatunde Fashola, Minister Power, Works and Housing and Suleiman Hassan Zarma, Minister of State, Power, Works and Housing announced a N72 billion fund to electricity distribution companies.
The ministers were categorical when they stated that the fund were to serve as a boost to electricity distribution companies to improve their network so that the massive investment can lead to economic growth and development of the country.
Suleiman Hassan Zarma, Minister of State, Power, Works and Housing was specially quoted to have said that “the laudable project being executed by TCN and power generation companies will not lead to significant improvement in the quality of power supply to the people unless the distribution companies also invest in rehabilitation and expansion of the network”.
Power sector operators see the federal government largess as a noble gesture, but are however skeptical about it not been just another policy statement by government with little or no will power to carry it through.
Industry close watchers in the power industry acknowledge that the entire electricity sector is faced with huge revenue shortfalls. The implementation of cost reflective tariffs, access to long-term debt capital and equity injection, will still not address the revenue shortfall to the system in the short term.
They insist that underpinning any debt or equity capital raise is a sustainable and cost reflective electricity tariff and a long-term tariff path. Without cost reflective electricity tariffs, the electricity sector is not likely to attract and sustain the much needed investments.
Zarma while speaking in Gombe during the commissioning of 1x30MVA 132/33KV power transformer at Gombe sub-station said that the investment would strengthen grid infrastructure for enhanced wheeling capacity that offers redundancy, consistent with the requirements of N-1 reliability criterion.
He also disclosed that the federal government had resolved the lingering issues slowing the completion of the Dadin-Kowa Hydroelectric power station in Gombe state, revealing that the ongoing construction work on the transmission line will soon be completed.
Details of the N72 billion funding by the Federal government would be a shareholder loan which the DisCos must be willing to match or it would be converted to equity.
Report shows that in the privatisation terms signed by the DisCos, the government has 40 percent shareholding in them while the core investors of the DisCos maintain 60 per cent shareholding.
Under the new fund investing gesture by the federal government, the government indicated that the Transmission Company of Nigeria (TCN) would be the source of the facility as well as its manager.
Babatunde Fashola, Minister of Power, Works, and Housing at different power sector occasions maintain the government’s financial facility would help the DisCos expand their networks to be able to take stranded electricity from the generation companies (GenCos) to consumers in the country.
Despite regular assurances from Babatunde Fashola, minister of Power, Works and Housing of steady incremental power in the country, industry close watchers say it remains to be seen how Nigeria which is currently struggling to attain constant power generation of about 7000MW can leap frog to 100,000MW by 2030.
KELECHI EWUZIE