About $4.3trillion capitalisation fund is required by the 11 power Distribution Companies (DisCos) in the country to effectively distribute generated power to the last destinations, the Managing Director of the Transmission Company of Nigeria (TCN), Mr Usman Gur Mohammed, has said.
The power firms will the huge capitalisation fund to match the investments being done in the transmission section, Mr Mohammed told Daily Trust in an interview.
Daily Trust reports that TCN has attracted about $1.32 billion multilateral funding and is executing projects targeted at attaining 20,000MW energy wheeling capacity by 2021.
The TCN Managing Director said government interventions for DisCos and Generation Companies (GenCos) has hit N1.5trn.
He said, “Nigeria has supported the power sector with N213bn CBN Power Sector Intervention Fund, N701bn CBN payment Assurance Fund, and now FGN is considering approving N600bn payment assurance.’’
He said upon approval of the N600bn intervention, the total direct support to the power sector as a result of illiquidity will be N1.5trn.
However, he said, this support did not cover transmission shortfall but as a result of the DisCos’ inefficiency and lack of capacity to collect revenue for the sector.
Since the interventions are not yielding results, Mohammed said, “DisCos must be capitalized with at least $4.3 trillion (with government paying its own share of the 40%), defined with at least five year interest grace period and at least 10 years repayment period.”
Owners of DisCos must also bring their 60% of the specified capital, according to him.
He urged the Nigerian Electricity Regulatory Commission (NERC) to operate effectively and provide cost effective tariff and execute normal tariff reviews; this it hasn’t done for seven times.
He noted that government should review the operations of the Nigerian Bulk Electricity Trading plc (NBET) with a view of closing it because it was to serve in the interim of privatisation.
NERC should effectively implement its corporate governance codes for operators in the sector.
“The books of the DisCos should be reset to make them clean and attractive. These will lead to sustainable power sector,” Mohammed said.
Source: Daily Trust