According to Bloomberg reports, the unending daily blackouts in Nigeria is costing the economy around $100 billion every year in missed opportunities. Shortages of Gas, vandalism of pipeline, limited funding, prices that are unprofitable and corruption implies that fixing the electricity cuts two years after the electricity state power companies were sold to private investors will still be a difficult phenomenon.
Expectations that Nigeria’s power condition would get better after ex-President Goodluck Jonathan partially sold 15 state generation and distribution companies for over $3 billion to private investors in 2013 have been scuttled. The private investors discovered that the companies they acquired lack financial viability and the indebted electricity distribution firms began to hemorrhage cash. A partner at Lagos-based Detail Commercial Solicitors, Dolapo Kukoyi, during his advice to investors looking to purchase the distribution companies revealed; “People basically bought blind — this was across the board.”
Benjamin Dikki, the Director General of the Bureau of Public Enterprises stated that despite the effort of Nigeria’s apex bank, Central Bank of Nigeria (CBN) in packaging ($1.1 billion) bailout fund to cover shortfalls of revenue and help the companies in meeting up with their debt-service duties on bank loans of around 500 billion naira, the power industry still needs as much as $20 billion injection within the next six years, According to the DG, this led the sales of the distribution companies.
The generation companies are currently experiencing chronic gas shortages required for the efficient running of 70 percent of the plants and it was also reliably gathered that the distribution utilities have not paid about 20 billion naira owed since February 2015.
While reacting as to why the distribution utilities have not paid their debt and the way forward concerning this development, Rumundaka Wonodi, the Chief Executive Officer of the Nigerian Bulk Electricity Trading Plc (NBET) said that the NBET has fund to make the market payments for five months but the company does not want to make payment without the consent of Nigeria’s Minister of Power. He stated further that the major problem now is that President Muhammadu Buhari is yet to appoint the Minister since he took over from former President.