Management of General Electric (GE) has sought Sovereign Guarantee from Vice President Yemi Osibanjo as condition precedent for it to invest in the country’s Electricity Distribution Companies (DisCos).
The request came on the heels of the meeting that the GE had with the DisCos in Abuja on Tuesday from which it was shocked at the dismal nature of the Nigeria’s power firms’ balance sheets.
The Executive Director of Association of Nigerian Electricity Distributors (ANED) Barrister Sunday Oduntola broke this news in Electricity Policy Education Workshop: Energy Corespondents in Abuja Wednesday.
The theme of the workshop was the “Challenges of the Nigerian Power Sector.”
He said that operators need much money for the sector to bridge the liquidity gap.
The only way the GE can stake its money in the sector, according to Oduntola, is if the federal government can serve as a sovereign guarantee in case of any infraction.
He said that “as at Tuesday we had a meeting with the team of people from the General Electric. The Head of General Electric had a meeting with ANED. He asked to see our balance sheets. He wanted to know how impressed the sector is. As soon as he saw the balance sheets, he said No! No! He said if the government can provide what is called sovereign guarantee, yes!”
“In the case of the General Electric, it happened Tuesday. They wanted to know how the sector is doing in terms of doing business. So they are trying to see how they can come in. They have a lot of money to invest. They wanted to know the challenges like the issue of metering, network and others.”
According to him, the meeting is an ongoing discussion because “they have the money and we need more foreign investors to come in.”
Oduntola also noted that Nigeria was not conducive for investment even when the power sector was privatized as security of investment always means the sanity of contract.
He said that the business environment in the country is so difficult to the extent that only two out of the 11 distribution companies can conveniently pay their workers’ salaries as when due.
Arguing that the Discos have injected fund into their business since 2013, he said that they have installed a total of 612,552 meters.
He insisted that the companies the major constraint to investment in the sector is lack of cost reflective tariff since there has been embargo on tariff increase since 2015.
Oduntola recalled that part of the $1.4billion that the paid for the Power Holding Company of Nigeria (PHCN) assets was used to pay off the workers.
The ANED spokesman commended the administration of President Muhammadu Buhari, which he said has been more faithful to the development of the power sector than the previous ones.
He said the reason why some DisCos sometimes reject their load allocation, is when the Transmission Company of Nigeria (TCN) evacuates it where there are no equipment to cope with it.
He added that the DisCos also reject load allocation when it is wheeled to location that is permeated with electricity theft, yet does not pay for power.
“It is true that sometimes we reject load allocation. I have the right to tell you where I want my light,” he said.
He condemned corrupt practices in the electricity market which he said are the handiwork of both staff of the companies and their customers.
Confirming that the Federal Executive Council has approve the payment of N26billion as the verified Ministries, Departments and Agencies (MDAs) debt, he noted that the Minister of Power, Works and Housing, Babatunde Fashola directed that the money should be paid as part of the debt that the DisCos are owing Nigeria Electricity Bulk Trading Company (NBET).
In other words, he said none of the distribution companies received the cash from the federal government.
