The Nation Newspaper

Tag: LOAN

  • Fidelity Bank takes charge on 9mobile loan

    Fidelity Bank takes charge on 9mobile loan

    Fidelity Bank has taken a five per cent impairment charge on a N17.3 billion ($55 million) loan to Etisalat Nigeria, now called 9mobile, Fidelity Chief Executive Nnamdi Okonkwo said yesterday.

    The bank’s action was in line with a Central Bank of Nigeria (CBN) request.

    Etisalat Nigeria took out a $1.2 billion syndicated loan from a group of 13 local banks four years ago but has defaulted on repayments this year due to a currency crisis and recession in Nigeria.

    A banking source told Reuters last week that the CBN had asked lenders involved in the loan to take a five per cent provision as part of their third-quarter results.

    Okonkwo said Fidelity Bank was also raising provisions across its loan book. “We are revising (the non-performing loan ratio) from sub-five per cent to sub-six per cent by end of the year, due to currency conversion and some risk on the oil and gas book,” he told an analysts call held to discuss its nine-month results.

    “We have seen some improvements in the transport sector and the consumer book.”

    Net loans stood at N753.8 billion as of September, up 4.9 per cent from a year earlier. The bank was targeting 7.5 per cent loan growth this year, Okonkwo said.

    Fidelity Bank on Monday posted a pretax profit of N16.24 billion for the nine months through September, up from N9.83 billion a year ago.

    The Senate on Tuesday voted in favour of launching an investigation into the default of Etisalat Nigeria and into how its funds were used. Nigerian lenders have picked Barclays to try to find new investors for 9mobile, two banking sources told Reuters last week.

    Okonkwo also said the bank had submitted details of personal and business accounts that lacked complete identification to the CBNfollowing a court order. He declined to say how many accounts were involved.

    A court has ordered a temporary freeze on millions of bank accounts with incomplete identification documents and the forfeiture of funds in those accounts as the government seeks to ensure compliance with money laundering rules.

  • $5.5b loan: Debt service cost to rise above 62%, says RenCap

    $5.5b loan: Debt service cost to rise above 62%, says RenCap

    The Federal Government’s plan to borrow $5.5 billion through Eurobonds will raise the country’s debt service to revenue cost beyond 62 per cent, Sub-Saharan Africa Economist at Renaissance Capital (RenCap) Yvonne Mhango has predicted.

    The investment and research firm analyst said the debt service/revenue stood at 29 per cent in 2014 fiscal year, even as plans to raise additional fund in the near term imply debt service costs will rise further, albeit at a slower rate.

    In a report released to investors yesterday, titled: Nigeria: Fiscal operations in Seven-month – Capital Expenditure-Light and Debt Service-heavy, she said capital releases for the 2016 budget continued into the first quarter of this year, while public debt has increased by seven percentage points of Gross Domestic Product (GDP) since 2014.

    On the debt service/revenue, she said: “Nigeria’s debt service/revenue has risen sharply in recent years to 62 per cent as at June 2017, against 29 per cent level in 2014. This largely reflects the Federal Government’s low revenue/GDP target of four per cent this year. The Federal Government plans a $5.5 billion Eurobond issuance before year-end, 2017 as part of its efforts to lower local interest rates, by reducing domestic debt/total public debt to 60 per cent, against the over 70 per cent today”.

    Mhango said budget performance in the first seven months of this year and debt developments showed there were no capital releases for the 2017 budget, because it was passed late. She said the Federal Government’s 2017 budget of N7.4 trillion was 6.2 per cent of GDP, and was signed by the executive, after being passed by the Senate in May.

    Of this, N3.1 trillion (2.5 per cent of GDP) was spent in seven months. “Expenditure in seven month was 30 per cent below the (pro-rata) target and was entirely made up of recurrent spending. There were no capital releases from the budget because of its late approval.” she said.

    Mhango said revenue came in on target, at N2.6 trillion (2.1 per cent of GDP) because of a one-off refund from the Paris Club. “When this is stripped out, there was a 20 per cent shortfall in revenue. Below-target spending – due to delayed capital releases – explains the small budget deficit for seven month of 0.8 per cent of GDP, by our estimate, as against the 1.5 per cent (pro-rata) target,” she said.

    She disclosed that the federation account revenue was one-third below target, and that three-quarters of the FGN’s planned revenue for this year is expected to come from the Federation Account, of which two-thirds will stem from oil revenue.

  • That $5.5bn loan request

    •Desirable as it might be; the question is whether the government can manage it well

    Last week, President Muhammadu Buhari requested the National Assembly for authorisation for $5.5 billion external loans. Of this, $3 billion is for re-financing domestic maturing debts and the other, the $2.5 billion Eurobond for the funding of the 2017 capital budget. Whereas the proceeds of the Eurobond issue is already anticipated to finance the deficit in the 2017 Appropriation Act, the US$3.0 billion, according to the president, is merely to re-finance maturing domestic debt and so “will not lead to an increase in the public debt portfolio because the debt already exists, albeit in the form of high interest short-term domestic debt”.

    He specifically drew the attention of the National Assembly to the N1.663 trillion allocated to debt service in the 2017 budget, representing a whopping 32.73 per cent of the total expenditure, to underscore why the refinancing of the domestic loans has become imperative: “the substitution of domestic debt with relatively cheaper and long-term external debt will lead to a significant decrease in debt service cost. This proposed re-financing of domestic debt through external debt will also achieve more stability in the debt stock while also creating more borrowing space in the domestic market for the private sector”.

    On the surface, it is hard to fault the Federal Government’s two-pronged approach to the debt issue. While the current realities dictate that the Federal Government be given the fiscal leeway to execute many of the projects considered as priority, particularly those with the ability to jumpstart the sluggish economy, so is the imperative to bring down debt service obligations to a level considered more sustainable when matched with the current revenue profile. Neither of the options in our view however, vitiates the general concerns about the debt trajectory, particularly in the context of our recent history of opportunistic conversion of the debt instrument into instruments of personal enrichment by officials.  Or even the larger concerns with attendant risks associated with foreign currency-denominated debts.

    It is therefore beside the point that the government, for the most part, is wont to anchor its position on the premise that the debt to GDP ratio, currently put at 17.76 percent compares favourably with its peers.  At best, we see the idea of substituting one loan for another as merely seeking to deaden the psychological impact of unflattering statistics of revenue-to-debt servicing ratio which the Islamic Development Bank (IDB) representative in Nigeria, Abdallah Mohammed Kiliaki, sometime last year put at between 75 to 80 per cent. For now, it may seem pragmatic; only in the fullness of time will Nigerians begin to see it for the placebo that it truly is in the event of the failure of the Federal Government to shore up revenue.

    Much of course has been made of loans as being something of an end in itself as against being a means to an end, which of course explains why the debate has been somewhat obscure. To be sure, Nigerians have long gone past the sterile debate about what needs to be done or even the scale of investment needed to match their ambitions as Africa’s so-called biggest economy. Their expectation is to see a Buhari administration which promised Nigerians a different path to getting things done, move swiftly to deliver on its key agenda of infrastructure renewal as a strategy to unlock the nation’s vast potential and to get the country working within the shortest possible time.

    That Nigerians are still locked in the debate over the debt issue after more than two years in office would in part reflect their frustrations with the administration’s dilatoriness, particularly its snail-paced approach to governance and utter lack of coherent strategy on important matters of the day. Harder to imagine is that the $2.5 billion Eurobond request is part of a budget that has barely three months left to run its course.

  • Where is BoI’s N11 billion loan?

    Where is BoI’s N11 billion loan?

    It was founded to help businesses grow. But many of them  took loans from the Bank of Industry (BoI) without paying back. This has led to an investigation by the House of Representatives Public Account Committee, write Bukola Aroloye and Dele Anofi.

    The Managing Director of Bank of Industry (BoI), Mr. Olukayode Pitan, is by nature a quiet and self-effacing man. But this seems to have changed. Owing to the quantum of investment portfolio and money his organisation, sits on, Pitan, in just about three months after assuming office has found out how hot his seat can be.

    Last month  he was a guest at the House of Representatives Public Account Committee hearing of the  N11 billion unrecovered loans allegations against the BoI. The Committee is headed by Kingsley Chida. In inviting the BoI chief, the committee noted that the inability to recover such humongous loan is capable of defeating the objectives of boosting the economy through the active participation of small and medium enterprises (SMEs).

    The queries at the hearing came in torrents. From the 2015 Auditor General’s queries on the recovery of N8billion to the N2.7 billion domiciled with BoI for disbursement since 2012 under the YouWin initiative. These monies, the PAC believes, are capable of sending the government’s financial institution into distress.

    Pitan, however, spiritedly defended the bank, explaining steps that have been taken to recover the loans. For instance, on the recovery of an N8 billion credit facility, he explained that the BoI, in complying with the directives of the Accountant General of the Federation (AGF), commenced recovery efforts immediately; including publishing the names of the debtor companies in three newspapers.

    “In addition, we embarked on the second option and we have recovered some money, some of the companies were reported to the Economic and Financial Crimes Commission (EFCC) for recovery. We have also taken possession of the property of some of them and they are on the verge of being sold,” the BoI boss explained, adding that some of the debtors have taken financial institution to court, including some firms he perceives as having no case but who opted to subject the recovery to litigation.

    Still, the N2.7billion YouWin fund domiciled with BoI for disbursement was another issue he had to defend. Pitan’s revelation on this, however, raised some curiosity. Since 2012, the BoI boss said, the bank has only been able to access N870million out of the N2.7 billion. Of the accessed money, he further revealed that N129million was returned to the treasury through the Treasury Single Account (TSA) in 2015.

    “We could only access N780million from the fund and we returned N129million to the treasury through the TSA with the interest of over N2billion.  Ours was to disburse the funds to the beneficiaries in accordance with the list from the Ministry of Finance. The fund is not BoI’s,” he told the lawmakers.

    The BoI helmsman was, however, silent on the exact figures recovered so far, as well as the names of the companies that had taken the bank to court as he explained that he has to check his records for the figure.

    By and large, Pitan believes that the situation is not enough to put the bank in any precarious situation. “The bank is not under stress. This debt does not in any way threaten our business. We are rated and in a healthy position, this cannot affect us,” he assured the PAC members.

     

    SMEs operators’ position

    For operators in the SME sector, Pitan’s claim of disbursement of such money does not hold. The Chairman of Nigeria Association of Small Scale Industrialists, Lagos State Chapter, Kuti George, challenged the bank to make public the list of beneficiaries of such loans. He explained that as a body, his members do not really concern themselves with the credit facility, considering that it has a robust financing system within itself.

    “I don’t know of any loan given out; we don’t really bother our self on this because we operate a very vibrant cooperative system that even gives money to our members without tears based on personal guarantee of people and we even give loans among ourselves,” George explained.

    The Chairman of Toiletries and Cosmetics Manufacturers’ group of the Manufacturers Association of Nigeria (MAN), Mr. Ikpong Umoh, corroborated George’s view on the matter. He disclosed that the BoI does not meet the needs of SMEs, as it gives loans with high interest rate of 25 percent or more to SMEs.

    “BoI claims to directly help SMEs but the fact is that BoI does not share and under-write the risk of SMEs. For example, BoI gives loan for machineries and expansion and not for start-ups of new industries,” he explained.

    George explained that if government truly wants to grow the industrial base, then it should not be scared of risk taking.  “We should be prepared to take risk instead of giving loans to people who are ready to payback. Instead, he said, such loans end up in the pocket of people who will not come back.

    Beneficiaries of BOI loans 

    However, some stakeholders disagree with the submissions of some SMEs operators. One of such is the national programme coordinator of Rural Finance Institution (RUFIN), Olumuyiwa Azeez. For him, the activities of the BoI’s partnership with RUFIN is geared towards stimulating a seamless process by reaching beneficiaries in rural areas across the federation and including them in Nigeria’s financial landscape. This is aptly supported by the BoI.

    Azeez said the institution is proud that its track record has earned it an opportunity to be a channel for reaching out to thousands of micro entrepreneurs who do not have an opportunity of accessing funds to boost their businesses.

    Yet, others say that the impact of the BoI reverberates across the business landscape of the country. For instance, the BoI, through its Graduate Entrepreneurship Fund (GEF) programme targeted at members of the National Youth Service Corp (NYSC), has recorded over N262.9 million disbursements to 177 successful candidates. The loans granted under this scheme have since become interest-free from last May. However, beneficiaries of loans preceding May 2017, will be required to pay loan interests that accrued up to 30th April, 2017. As at March 31, 2017, BoI had approved N583.8 million for disbursements to entrepreneurs under the scheme.

    And the BoI is delighted in this. “The Bank of Industry is highly delighted in the outcome of its investment in these young Nigerians. The bank firmly believes that entrepreneurship is a critical pathway to resolving the worrisome unemployment problem in the country. Hence, the bank desires to ensure the businesses that have been created through the GEF programme remain sustainable with progressive migration from small businesses to medium and eventually to large enterprises,” a statement by the bank read.

    Still, the BoI recently unveiled an interest-free loan for women artisans, market women and small holder farmers in the country. The scheme comes under the National Women Empowerment Fund (NAWEF) of the federal government. NAWEF is an aspect of the federal government’s Social Investment (Intervention) programme designed for women and administered by BoI to issue interest-free loans to successful applicants.

    The minister for women affairs and social development, Aisha Jummai Alhassan, listed eight states of Akwa Ibom, Adamawa, Borno, Yobe, Osun, Abia, Nasarawa and Jigawa have been selected for the pilot phase where women can access N200 million in loans, starting from N10,000 to N100,000.

    BoI’s Senior Manager, Micro enterprises, Aisha Abdullahi, explained that her organisation also has a scheme, the Government Enterprise and Empowerment Programme (GEEP), which is exactly like NAWEF, adding that the latter is only for women, unlike GEEP where both men and women can benefit from it.

    “The reason for this difference is to ensure that more women have access to interventions in order not to be crowded out by men. GEEP has already started and the verification process is like that of NAWEF,” she added.

  • Three ‘defraud’ LSETF loan applicants

    An Ikeja Magistrates’ Court will on Wednesday begin the trial of two men who allegedly posed as Lagos State Employment Trust Fund (LSETF) officials to defraud loan applicants of thousands of naira.

    Prince Akintayo Akinjide and Adesoji Adeyele were arraigned by the police on July 24, before Mrs L. I. Balogun on a charge of obtaining money under false pretences contrary to Sections 285, 311, 312 (1), (a) and 409 of the Criminal Law of Lagos State, 2011.

    According to prosecuting Inspector Babajide Williams, the defendants presented themselves as LSETF officials and promised to assist their victims to obtain loans at a cost of between N4,500 and N12,000.

    “About 300 persons are believed to have fallen victim to this scam,” Williams said.

    Akinjide and Adeyele pleaded not guilty.

    Magistrate Balogun granted them N200,000 bail with two sureties each in the like sum. The sureties must be gainfully employed and have evidence of three-year tax payment.

    Last April 6, the police brought a 32-year-old man, Emmanuel Olajide, before Mrs G. O. Anifowoshe of the Ikeja Magistrates’ Court for allegedly printing and selling fake LSETF application forms.

    Olajide was arraigned for alleged forgery and obtaining money under false pretences contrary to Sections 285, 361 and 363 of the Criminal Law of Lagos State, 2011.

    Prosecuting Inspector E. Victor told the court that the defendant printed LSETF logos on fake loan application forms, “which he sold at the rate of N10, 000 each to his innocent victims.”

    Victor said the defendant promised his victims assurance of a successful loan application process knowing same to be false.

    The defendant pleaded not guilty.

    Magistrate Anifowoshe granted him N200,000 bail with two sureties in the like sum. The sureties must be gainfully employed and have evidence three-year tax payment.

    Olajide’s trial continues on September 4.

    Meanwhile, the LSETF, which confirmed the defendants’ prosecution, said the form and the process for the loan scheme are “absolutely free of charge” for all Lagos residents.

    Its Executive Secretary, Akin Oyebode, urged the public to report to the police anyone making a request for payment or inducement of any kind “as such request is nothing but fraudulent.”

    He said: “For the avoidance of doubt, every member of the public should note that the process for accessing the LSETF loans is administered transparently, devoid of any consideration of ethnicity, religion, gender or political affiliations.

    “It is merit-based and open to all Lagos residents who desire to secure financing to grow their businesses and consequently create jobs for many unemployed youths.

    “All persons interested in applying for the loan can either pick up the form at LSETF liaison offices in their nearest local government office or download from the LSETF website free of charge.”

  • CBN pegs maximum agric loan per project at N2b

    CBN pegs maximum agric loan per project at N2b

    The Central Bank of Nigeria (CBN) yesterday amended the Commercial Agriculture Credit Scheme (CACS) following which it pegged maximum loan intake for any project under the scheme at N2 billion.

    It equally pegged the maximum interest rate to the borrower under the scheme shall not exceed nine per cent, inclusive of all charges.

    The apex bank also approved the participation of all deposit money banks under the scheme, with all the participating banks required to sponsor projects from any of the target areas indicated in the guidelines and bear all the credit risk of the loans they will be granting.

    The CACS is being financed from the proceeds of the N200 billion, three year  bond raised  by  the  Debt  Management  Office  (DMO).  The fund will be  made  available  to  participating  bank(s), to  finance  commercial agricultural enterprises.

    “The single obligor for any project from a participating bank under the Scheme shall be N2 billion while for State Governments shall be N1 billion. However, for special schemes and programmes for agricultural development, state governments may be granted concessionary approval for more than N1 billion,” the CBN.

    The scheme is expected to help  fast  track  development  of  the  agricultural  sector  of  the  Nigerian economy  by  providing  credit  facilities  to  commercial  agricultural enterprises at a single digit interest rate; enhance  national  food  security  by  increasing  food supply  and effecting  lower  agricultural  produce  and  product  prices,  thereby promoting low food inflation.

    The CBN explained that  part  of  its  developmental  role, it has in collaboration with the Federal Government of Nigeria, represented by the Federal    Ministry    of    Agriculture    and    Rural    Development    (FMARD) established  the  Commercial  Agriculture  Credit  Scheme for  promoting commercial agricultural enterprises in  Nigeria, which is a sub–component of    the    Federal    Government    of    Nigeria    Commercial    Agriculture Development  Programme  (CADP).

    This fund will complement  other special initiatives of the Central Bank of Nigeria in providing concessionary funding for agriculture such as the Agricultural Credit Guarantee Scheme (ACGS)   which   is   mostly   for   small   scale   farmers,   Interest   Draw-back scheme,    Agricultural    Credit    Support    Scheme    and    other    similar developmental initiatives.

  • Reps give ultimatum to BoI chief over N11b loan

    Reps give ultimatum to BoI chief over N11b loan

    The House of Representatives has given the Managing Director, Bank of Industry (BoI), Olukayode Pitan 24 hours to appear before it.

    He has up to 11am today to appear before the Public Accounts Committee (PAC) of the House over N11billion the bank has been unable to recover.

    In his place at the PAC meeting yesterday, was the bank’s Chief Financial Officer, Taiwo Kolawole, who said Pitan had to be at another previously scheduled meeting in Enugu.

    This angered the Kingsley Chinda-led  Committee that sent a reminder of its earlier invitation to Pitan on July 28, saying the MD’s attitude to the House was denigrating,

    Chinda said: “Over N8billion loan given out have not been recovered and the bank is not doing anything about it according to the query. The second query is on another N2billion unexplained expenditure.

    “Considering the enormity of the sum involved, over N11billion as contained in the query by the AuGF, and considering the fact that the MD has given more importance to a meeting with Enugu State government.

    “We are tempted to take action as appropriate but in the spirit of fair hearing, we want to give him another opportunity so that he can appear before us tomorrow,  Aug 18, 2017 by 11 am, failure of which we will order for his arrest.”

     

  • 5,000 get MSME loan

    The nationwide Micro, Small and Medium Enterprises (MSMEs) Clinic that was flagged off in the Federal Capital Territory (FCT) appears to be hitting the right notes among many petty traders and small entrepreneurs in rural areas.

    The MSME Clinic is an initiative designed by the office of the Acting President, Prof. Yemi Osibanjo, in collaboration with some other relevant agencies to ease doing business in the country.

    There were indications from the beginning of the event that about 5,000 persons have benefited from the MSMEs loans disbursed through the Abuja Enterprise Agency (AEA).

    Disclosing this, FCTA Permanent Secretary, Dr. Babatope Ajakaiye, who represented the Minister, Malam Mohammed Bello said the FCTA will strengthen the scheme by creating more help desks in all the six Area Councils to stimulate more business growth.

    “Over 5000 individuals have benefited from FCTA loans, through Abuja Enterprise Agency (AEA).  The FCT Administration is to create an Abuja Enterprise Agency desk across the 6 Area Councils to boost business growth in the territory,” he said.

    Earlier in his speech, the Managing Director, Abuja Enterprise Agency (AEA) Mohammad Arabi stated that the present administration places premium on the SME sector because it employs about 33 million people and holds about 96 percent of the business sector in Nigeria.

    Arabi who lamented that Nigeria was lagging behind in the SME sector, also said that the MSME clinic was a strategic effort to move away from the poor status.

     

  • Power firms worry over N700b loan

    Power distribution companies (DisCos) are worried that the N700 billion Federal Government’s loan may not be enough to take care of their obligations, The Nation has learnt.

    Their fear stems from the  foreign exchange rate, which has increased the cost of production, and the  state of the economy. But they believe the loan would help to reduce their shortfalls, urging the government to extend similar assistance to other operators.

    The Director of Research, Association of Nigerian Electricity Distributors (ANED),  Mr. Sunday Oduntan, said the firms may not be able to  record much growth with the money. Although, it would help in reducing operational losses  it cannot guarantee the firms’ optimum performance, he said.

    He urged the government to provide a lifeline to operators in the upstream, midstream, downstream, and others in the value chain, to develop the oil and gas sector.

    Oduntan said: “The energy distribution companies are happy with the N700 billlion loan. However, the money cannot solve the problems facing the power firms. The DisCos are experiencing dearth of infrastructure caused by lack of liquidity in the industry. There are problems such as weak and obsolete transmission/distribution equipment, shortage of gas, meters, transformers and others.

    “The lull in activities in the petroleum industry is due to low engagements in the exploration and production (E&P) segment of the oil and gas sector. Therefore, extending such lifeline to E&P players will go a long way to boost gas supply to the thermal power plants and electricity supply. That is why the government needs to enhance the growth of the oil and gas industry by giving loans to the operators.”

    Oduntan said the N700 billion facility and the over N1 trillion debts owed the power firms by the Ministries, Departments and Agencies (MDAs) of government are not the same. “The MDAs are yet to pay more than N1 trillion, which they owe the power distribution companies. The debts and the loan are two different issues and should not be construed to mean the same thing. The loan is being given to compensate for debts,” he said.

    He said the decision by ANED and its members to keep silent on the issue of debts should not be mistaken for stupidity, stressing that the idea was to foster peace in the country. According to him, many stakeholders are peddling rumours about the state of the sector, including the debts owed the DisCos, among other issues.

    According to Oduntan, the problems in the sector are enough for the operators to contend with, adding that it would amount to waste of efforts if the operators engage in counter accusations with those accusing them of poor performance.

    The sector is yet to record any meaningful growth since 2013 when it was sold to the investors in the private sector. Instead, the industry has been facing problems such as poor generation, supply of electricity, shortage of meters, huge debts, among others. The sector recorded 2,500 megawatts (Mw) of electricity in the first quarter of 2017, the lowest ever in recent times. To improve power supply, the Federal Government advocated for energy mix, a development, which ensures that the country uses both on-grid and off-grid methods of generating electricity for growth.

  • Power firms worry over N700b loan

    Power distribution companies (DisCos) are worried that the N700 billion Federal Government’s loan may not be able to meet their obligations, The Nation has learnt.

    This fear is as a result of the prevailing foreign exchange rate, which has led to rising cost of production and the chaotic state of the nation’s economy. The firms said the loan would help them to reduce their shortfalls, urging the government to offer similar assistance to other operators in the value chain.

    The Association of Nigerian Electricity Distributors (ANED) Director of Research, Mr. Sunday Oduntan, said due to the bad economy, the firms may not be able to  record much growth with the money. He said, though the loan would help in reducing the operational losses of the power firms, it cannot guarantee them optimum production.

    He urged the government to provide lifeline to operators in the upstream, midstream, downstream, and others in the value chain, in order to develop the oil and gas sector.

    Oduntan said: “The energy distribution companies are happy with the N700 billlion loan. However, the money cannot solve the problems facing the power firms. The DisCos are experiencing dearth of infrastructure caused by lack of liquidity in the industry. There are problems such as weak and obsolete transmission/distribution equipment, shortage of gas, meters, transformers and others.

    “The lull in activities in the petroleum industry is due to low engagements in the exploration and production (E&P) segment of the oil and gas sector. Therefore, extending such lifeline to E&P players will go a long way to boost gas supply to the thermal power plants and electricity supply. That is why the government needs to enhance the growth of the oil and gas industry by giving loans to the operators.”

    Oduntan said the N700 billion facilities and the over N1 trillion debts owed the power firms by the Ministries, Departments and Agencies (MDAs) of government are not the same. “The MDAs are yet to pay more than N1 trillion, which they owe the power distribution companies. The debts and the loan are two different issues and should not be construed to mean the same thing. The loan is being given to compensate for debts, he said.

    He said the decision by ANED and its members to keep silent on the issue of debts should not be mistaken for stupidity, stressing that the idea was to foster peace in the country. According to him, many stakeholders are peddling rumours about the state of the sector including the debts owed the DisCos, among other issues.

    Oduntan said the problems in the sector are enough for the operators to contend with, adding that it would amount to waste of efforts if the operators engage in counter accusations with those accusing them of poor operation.

    The sector is yet to record any meaningful growth since 2013 when it was sold to the investors in the private sector. Instead, the industry has been facing problems such as poor generation, supply of electricity, shortage of meters, huge debts, among others. The sector recorded 2,500 megawatts (Mw) of electricity in the first quarter of 2017, the lowest ever in recent times. To improve power supply, the Federal Government advocated for energy mix, a development, which ensures that the country uses both on-grid and off-grid methods of generating electricity for growth.