Expert Bemaons Power Firms’ Default On Bank Loans
A former Executive Director at the Asset Management Corporation of Nigeria, Mr Kola Ayeye, has decried the default on bank loans by electricity generation and distribution companies in the country.
Ayeye, who is the Managing Director of Growth and Development Asset Management Limited, stressed the need for the Central Bank of Nigeria and commercial banks to collaborate with the Nigerian Electricity Regulatory Commission to reposition the power sector for a quantum leap in performance.
“The current operators should be compelled to either liquidate their debts or participate in a better managed programme of ceding management and control to a best-in-class operator. The debts provide a platform for inviting new operators through either voluntary negotiation with the existing owners or receivership,” he was quoted in a statement as saying at an interactive forum.
He suggested that the privatised entities should not be renationalised, adding, “However, the CBN, banks and NERC should initiate a programme of using these debts as a basis for the concession of underperforming operators to a world-class operator. This operator will be responsible for the entire value chain covering feedstock production, generation, transmission, distribution and collection.”
Ayeye, who noted that it was time to admit the failure of the power sector privatisation, said NERC, CBN and banks should, on a competitive basis, invite a global player to commit to generate, transmit and distribute a minimum of 20,000 megawatts daily within five years, and increase to 30,000MW daily by the 10th year.
He said, “We will be contracting to pay for power successfully delivered to the consumer rather than contracting for the execution of power projects. Execution of power projects has produced very poor results after huge investments in excess of $16bn. The nation has invested massively in power projects with poor results, so we should change the model. Rather than contracting to execute power projects, let’s contract best-in-class players to deliver power.
“It is not our business how they generate, transmit or distribute the power. They are to deliver power. They will only get paid for the power they deliver to the consumers. Such big players exist and the size of the Nigerian power market is sufficient to attract them.”
He suggested that the contract with the new concessionaire should be backed with a 10-year payment guarantee for power delivered to the consumers which could be provided by the African Development Bank or the World Bank.
