LAGOS, AUGUST 10, 2016 – The power sector is under threat as generation company (GENCOs’) operators will shut down power supplies unless the government pays longstanding bills it owes them and improves gas supplies, a joint statement said on Wednesday.In 2013, Nigeria — famous for blackouts — started selling parts of its moribund state electricity firm, in a privatization that was meant to improve power supplies and attract billions of dollars in new investments – neither of which happened.
If the companies make good their threat, most industries and residential homes will be in darkness except for those that rely on expensive diesel generators.
Six power generating companies, known as Gencos, which had bought parts of the state firm, said they would shutdown electricity generation imminently if a debt of 156 billion naira ($485 million) owed from a government agency was not paid. They also said banks were recalling loans made to them.
Nigeria has paid arrears of 186.7 billion naira. The central bank has stepped in with a $213 billion loan to keep the system afloat and allow the power firms to access credit, but more is needed as the oil price slump pressures Nigeria’s currency.
The companies, which include Transcorp’s power subsidiary and Forte Oil’s power unit, said they struggled to repair their networks because imports of spare parts had become too expensive due to naira devaluation.
“In 2013, exchange rate was 150 naira per dollar. Today it is 310. How can we repair, equip, acquire new turbines at this rate of 310 naira per dollar and yet still operate with an old tariff?,” said the companies.
“(A) shutdown is indeed imminent,” they said in a statement.
