Power Sector Could Collapse As Banks Halt Loans

The inefficiencies in the privatised power sector has made the Deposit Money Banks unwilling to provide loans to electricity generation and distribution firms, an investigation by our correspondent has shown.

It was learnt that some banks were shunning the loan requests of the power firms as the financial institutions appeared no more convinced about the viability of investing in the power sector, judging by the happenings in the Nigerian Electricity Supply Industry.

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Minister For works, power and housing Mr Babatunde Fashola
Minister For works, power and housing Mr Babatunde Fashola

Officials of the Federal Ministry of Power, Works and Housing, the Nigerian Electricity Regulatory Commission, the Nigerian Bulk Electricity Trading Company Plc, as well as those from the financial sector said the lenders were becoming very cautious about lending to investors in the power business.

Our correspondent gathered that the inability of the power firms to meet their various contractual obligations to the NBET, gas suppliers, the DMBs and other service providers, had made some banks to shut their doors on loans to the electricity companies.

Also, it was learnt that the banks were not comfortable with the happenings around the tariff, as they argued that aside from the fact that the tariff was low, there was no sign that the Federal Government would raise it any time soon in order to adequately meet the revenue requirements of the power sector.

Officials at the power ministry, NERC and NBET stated that there had been pressure from the government on power firms, particularly on the Discos, to increase their investments in the sector so as to improve electricity supply as well as appropriate billing to consumers.

They said that the debt exposure of the power firms to the DMBs was very high and many of the investors in the privatised successor companies of the defunct Power Holding Company of Nigeria had tried getting further assistance from banks but were turned down.

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Daniel Enisan is a content writer at edliner.com. With a degree in mass communication, Daniel is a full breed journalist. Daniel is a realist, loves the use of sarcasm, a movie and music junkie. He is also a poet and a good listener.

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