Most of the electricity distribution and generation firms that bought the successor companies of the defunct Power Holding Company of Nigeria lack the financial wherewithal to adequately revamp the purchased companies, findings by SUNDAY PUNCH have shown.
In separate interviews with our correspondent, experts and some relevant heads of the Federal Government agencies and ministries, said most of the investors were not financially strong to give the firms the required facelift.
It was gathered that the recent international power summit held at the Banquet Hall of the Presidential Villa, Abuja, was to attract foreign investors that would partner with the weak power investors in funding their businesses.
It was also learnt that the inability of some of the power firms to effectively collect revenue from customers was posing a huge challenge to the investors.
This, according to industry officials, has affected the revenue generation of these firms, thus preventing them from expanding the already dilapidated infrastructure in the acquired firms.
The Chairman and Chief Executive Officer, Nigerian Electricity Regulatory Commission, Dr. Sam Amadi, in an exclusive interview with our correspondent, said it appeared that some of the power firms were financially incapable.
He said, “The new owners came on board faced with the concern of addressing their financial issues. So, it now looks like the new owners are not able to ensure efficiency in distribution and have limited power to serve their clients. This is because they cannot do any magic to increase the capacity.”
Amadi, who expressed the hope that the required investments in the sector would come in soon, however, noted it was sad that some of the power firms lacked the financial muscle to shoulder their respective financial responsibilities.
He said, “We have oversold the handing over as a panacea, maybe because we expected people who had enough financial clout to take over but they are not. At this stage, what the regulator is doing is to manage the scarcity and see if we can get entry points for more power through regeneration.”
Also, the Minister of Power, Prof. Chinedu Nebo, told our correspondent that the investors, during the bidding process for the power firms, had stated that they were financially fit on paper.
Asked to comment on the financial fitness of the power firms, he said, “It is difficult for me as minister of power to answer that question. However, I think that on paper, they are capable.
“It will be left for NERC, which regulates them, to make sure that things that they have shown us on paper that made the government cede these distribution companies to them are really enough and fulfilling. This is because it is one thing to see something on paper and another thing to see the reality.”
The Managing Director/Chief Executive Officer, Nigerian Bulk Electricity Trading Plc, Mr. Rumundaka Wonodi, also noted that some of the DISCOs complained about not having enough funds to pay for certain operational costs.
Although he admitted that the complaints of some firms might be justifiable, considering the recent drop in power generation, Wonodi argued that it was important to determine whether the companies were truly unable or unwilling to make the required financial commitment.
He said, “Credit worthiness is based on two things: first, you are able to or you are unwilling to. Right now, the argument they (power firms) are making is that they are unable to. We have to be sure that they are really unable to by seeing all the money and then, we will now know that they are truly unable to, even though they are willing. But now, we are not sure.”
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