Bank loans to power sector hit N726.3bn

By Admin on 19/08/2018

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The loans from Deposit Money Banks in Nigeria to the power sector have been put at N726.3bn.

According to the Association of Power Generation Companies, the country’s power sector is still faced with stiff liquidity crisis, a development that has made it difficult for power firms to adequately repay the loans.

In a document made available to PUNCH on Saturday in Abuja, the Executive Secretary, APGC, Joy Ogaji, stated that investors in power generation companies were finding it tough to run their plants as a result of the liquidity squeeze in the sector.

She said, “It is imperative to note that, the norm that Gencos should continue operating ‘suffering and smiling’ is fast gone as the cost of carrying out this maintenance patriotically has been financially exhausting.

“The state of the sector finance and access is further corroborated by the Financial Stability Report of the Central Bank of Nigeria, of December 2016.

“It shows that loans to the power and energy sector accounted for 4.5 per cent of the gross loan portfolio of the nation’s banking system as credit to the sector stood at N726.29bn.”

Ogaji said the Gencos had not been receiving full payment for the electricity supplied by them, while the gas suppliers were insisting and pressurising the Gencos for full payments for gas supplied to the power generation firms.

She said, “This has accounted for the sub-optimal growth, and the current dire situation of the Gencos, which has huge negative impact on the entire power sector.

“Secondly, they (Gencos) are detrimentally impacted as they are not even paid for making such capacities available on the grid since February, 2015 when the Nigerian Bulk Electricity Trading company was introduced into the market.”

Capacity payments are global norms in the electricity supply industry and play critical roles in enabling the Gencos in optimising their power generation capacities, making such capacities available when called upon.

Ogaji said no power generation company could survive without being paid available capacities.

She added, “This is worsened by the fact that their operations and maintenance cost is increased by the inefficient management of the grid, as several time every day the frequency gets out of the safe zone for all the loads on the generating units.’’

It was learnt that the safe zones for all equipment as prescribed by the power sector grid code is within 49.75Hz and 50.25Hz.

“It is proven that when the turbine operates out of its nominal frequency, the amplitude of ‘stress’ increases and serious damage can be cumulative,” the power generation firms said.

 

 

 

Source Punch

Posted on August, 19 2018

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