The Association of Nigerian Electricity Distributors (ANED) has lamented that N152.16billion Central Bank of Nigeria (CBN) fund reflecting on Distribution Companies (DisCos) accounts has blocked their access to funding from commercial banks.
The fund is part of the N201.61 billion the apex bank earmarked for the sector.
Its Director of Research and Advocacy, Barrister Sunday Oduntan in a statement, explained that the loan tagged, Nigeria Electricity Market Stabilisation Fund (NEMSF), was to pay for gas and other legacy debts incurred before private investors took over PHCN assets on November 1, 2013.
According to him, the breakdown showed that only N58.45billion (about 27.8 per cent) was designated for the DisCos while the balance of N152.16billion (72.3 per cent) was for the Generation Companies (GenCos), gas suppliers and other service providers. It would be payable in bits during a 10 year period by the beneficiaries.
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Oduntan said only N49 billion has been received by some DisCos out of the N120billion the CBN had disbursed since it commenced in 2015. He however lamented that although the N152billion balance was not for the DisCos, the financial books of the electricity retailers bear the debt burden.
“The debt encumbrance is a significant impediment to the DisCos’ ability to borrow money to finance their capital investment, and their financing of the entire value chain,” Oduntan explained.
On another N701.9billion the CBN assigned to Nigeria Bulk Electricity Trading Plc (NBET) to pay the GenCos from January to 2019, the group said if the retail end is not considered, the fund may not sustain the market.
Oduntan said: “It is a good first step towards resolving the market liquidity challenge and ensuring that the upstream operators are not financially distressed, but it is not a complete solution to the problem.
“As long as the retail end of the value chain continues to under-recover its cost, any possibility of the government recovering its intervention or fixing the ailments of the sector is an illusory one,” he noted.