More than six and a half years after the nation’s power distribution and generation companies were privatised, the core investors in the Discos are looking to restructure the loans advanced to them by banks for the acquisition of the assets.
The Discos also want the Central Bank of Nigeria Nigerian Electricity Market Stabilisation Fund disbursed to them to be restructured for longer duration.
In September 2014, about a year after the privatisation of the power sector, the CBN introduced a N213bn intervention fund, a loan facility with a 10-year repayment period.
The NEMSF was meant to assist the Gencos and Discos to settle legacy gas debts, execute agreed metering and maintenance programmes, and finance procurement of transformers and other equipment.
According to the Discos, the total amount of Discos’ portion of the CBN NEMSF is N49.9bn and a part of that cash was used as collateral for letter of credit guarantees to banks.
The Discos, in a joint document seen by our correspondent, said, “The NEMSF loan currently encumbers Discos’ balance sheets and is worsened by the difference in aggregate technical, commercial and collection loss as used in the tariff model versus reality.
“While other stakeholders in the Nigerian electricity supply industry were paid obligations due to them directly, monies due to the Discos were put on their books as loans.
“It is a first-line charge on Discos’ collections, and impacts on Discos’ financial transactions and remittance obligations.”
The power distributors said part of the loans was used for the purchase of meters and billing systems as well as to carry out enumeration.
While highlighting the way forward for the sector, they said, “Acquisition debt to be refinanced by the Bank of Industry and extended on a longer-term basis (10 years), with a single-digit interest rate and a moratorium of two years to allow the market to stabilise.”
According to the Discos, core investors injected about $2.4bn (debt and equity) in exchange for stakes in the unbundled companies.
They said the Nigerian commercial banks were encouraged to support the transactions and they provided debt finance to the tune of $2bn.
The Discos also called for an alignment of the Multi-Year Tariff Order ATC&C losses with the current reality.
They stressed the need for longer terms for government interventions and access to cheaper funding.
“Historical tariff shortfalls and debts owed by ministries, departments and agencies as at December 2019 should be taken out of Discos’ books,” the Discos said.
They said cleaning up their balance sheets would enable them to be creditworthy.