Nigeria’s
largest electricity companies will shut down power supplies unless the
government pays longstanding bills it owes them and improves gas supplies, a
joint statement said on Wednesday.
largest electricity companies 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.
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.
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.
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.
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.
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.
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.
shutdown is indeed imminent,” they said in a statement.
The
naira has lost 40 percent of its value since Nigeria ditched its 16-month-old
peg of 197 naira to the dollar in June in a bid to lure back foreign investors
who fled both the equities and bond markets after the plunge in crude prices.
naira has lost 40 percent of its value since Nigeria ditched its 16-month-old
peg of 197 naira to the dollar in June in a bid to lure back foreign investors
who fled both the equities and bond markets after the plunge in crude prices.
After
the privatisation, the government pledged to review tariffs as more power is
generated and upgrade the transmission network to give more people access to
the grid. But tariff reviews have not kept pace with rising cost, worsened now
by the naira devaluation, analysts say.
the privatisation, the government pledged to review tariffs as more power is
generated and upgrade the transmission network to give more people access to
the grid. But tariff reviews have not kept pace with rising cost, worsened now
by the naira devaluation, analysts say.
In
February, the Nigerian Electricity Regulatory Commission (NERC) increased
tariffs by 45 percent, triggering protest from consumers, already under
pressure from rising inflation, which hit a 10-year high in June. But the
tariff increase was not enough to cover their cost, generating companies say.
February, the Nigerian Electricity Regulatory Commission (NERC) increased
tariffs by 45 percent, triggering protest from consumers, already under
pressure from rising inflation, which hit a 10-year high in June. But the
tariff increase was not enough to cover their cost, generating companies say.
As
of July, the generating firms have received only 28.6 percent of their April
invoices, they said.
of July, the generating firms have received only 28.6 percent of their April
invoices, they said.
Chronic
power shortages are one of the biggest constraints on investment and growth in
Africa’s largest economy. Producing less than 4,000 megawatts, Nigeria’s
requires ten times the amount it currently produces to guarantee power to its
170 million people.
power shortages are one of the biggest constraints on investment and growth in
Africa’s largest economy. Producing less than 4,000 megawatts, Nigeria’s
requires ten times the amount it currently produces to guarantee power to its
170 million people.
However,
the generating firms are holding off on expansion. Generating companies have
around 5,000 megawatts of spare capacity which has no access to gas, they say.
the generating firms are holding off on expansion. Generating companies have
around 5,000 megawatts of spare capacity which has no access to gas, they say.
