The 11 electricity distribution companies (Discos) operating in Nigeria will in 2017 experience an exciting and encouraging business environment as the federal government has said that billions of naira being owed them by its ministries, departments and parastatals (MDAs) will be offset with moneys voted for that purpose in the nation’s 2017 budget.President Muhammadu Buhari have the assurance Wednesday in Abuja, while presenting the 2017 budget proposal of N7.298 trillion to a joint session of the national assembly, which was presided over by Bukola Saraki, president of the senate, and Yakubu Dogara, speaker of the house of representatives.
In September 2016, there were reports that Discos would cut off power supply to government MDAs over N93bn outstanding debts, which at the moment have risen to an estimated N100 billion.
Following this, the federal government said it will review the with a view to paying them off, but only if their status is ascertained.
“During 2016, we conducted a critical assessment of the power sector value chain, which is experiencing major funding issues. Although Government, through the CBN and other development finance institutions has intervened, it is clear that more capital is needed and we must also resolve the problems of liquidity in the sector,” President Buhari announced, while reading out the budget at the national assembly.
“On its part, Government has made provisions in its 2017 Budget to clear its outstanding electricity bills, and this we hope, will provide the much needed liquidity injection to support the investors,” he concluded.
Earlier in May, MDAs, state and local governments owed the Discos N78.7 billion before the energy bills climbed to the present figure of N100 billion.
With the Discos’ debt crisis growing worse, the liquidity shortfall across the entire value chain of the Nigerian electricity supply industry (NESI) has steadied at N809.8 billion, according to data from the Association of Nigerian Electricity Distributors (ANED).
“We all need help, if we die, Gencos will die; if Gencos die, transmission will die. Are all interconnected and have the same fate, and we will definitely and surely have to swim and sing together. Our business is not bankable, we are carrying deficit and nobody can borrow you money when you are carrying deficit,” said Sunday Oduntan, ANED executive director, research and advocacy.
This has constrained the electricity market, as the various companies operating in the different segments cannot recoup the money they have invested and develop expand energy infrastructure.
