MON, APRIL 27 2020-theG&BJournal- The Transmission Company of Nigeria (TCN) claims that Nigeria’s power sector will completely collapse if nothing is done quickly to capitalize the Distribution Companies (DISCOs) in a statement released by the General Manger Public Affairs, Ndidi Mbah.
The TCN made their case for recapitalization while citing the sudden load drop off witnessed last Saturday in Abuja.
It said, as at 19:00 hours on April 25, 2020, due to rainfall, Abuja dropped load and was off taking only 0.5MW and 16MW from TCN’s 330kV substations in Katampe and Gwagwalada respectively.
Meanwhile, the average load AEDC usually takes from Katampe and Gwagwalada Substations are 250MW and 150MW respectively.
Precisely at 17:00Hours load in Katampe Substation was 288.0MW, at 18:00 Hours, the load dropped to 174MW then at 18.30 it dropped to as low as 9.9MW, at 19:00Hours, this further reduced to 0.5MW. The load offtake by AEDC then increased to 33.2MW at 20:39Hours.
All AEDC 33kV feeders were out due to poor distribution network. This will certainly create high voltage that may damage TCN terminal equipments. This kind of situation will be more dangerous if the rain falls in most parts of Nigeria.
TCN Management is seriously disturbed because if nothing is done quickly to capitalize the DISCOs, the power sector will completely collapse.
Regardless of the statement, electricity experts agree that given the overarching need for expansion of distribution infrastructure, there is need for additional injection of investments which is best made through raising of capital.
The concern is that given the poor profitability of the DISCOs, how will the existing shareholders obtain acceptable value from the fresh capital and how do they convince investors that future returns are reasonable and acceptable bearing in mind the relationship between risk and returns?
The answers will determine whether the new issues will be successful or not.
Part of the conditions for the privatization of the DISCOs in 2013 was that the private sector investors were not allowed to approach the capital market for fresh equity until after 5 years.
‘’I didn’t think it was a wise condition to insert in the purchase agreement but given the low social capital (trust) in Nigeria, I guess government had no choice’ says Clem Ofuani, former aide to late President Musa Yar’ Adua as well as former Economic Planning Commissioner, Delta State.
‘’This is the time for the DISCOs to be opened up to fresh capital especially through quotation in the stock market however, the challenges of COVID-19 still need to be understood before new investments can be introduced to the market with any reasonable expectation of success,’’ he added.
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