The Managing Director of Azura Power West Africa, a power generating company, Edu Okeke, has called for a $250m market capitalization for each Electricity Distribution Companies (DisCos) in the country.
Okeke, who spoke in Abuja at the 4th edition of the Power Correspondents Association of Nigeria (PCAN) annual workshop, noted that many of the DisCos are struggling to pay their total bills to the entire value chain.
The workshop was themed: “Nigerian Power Sector: Ending the Talk, Moving to Action.”
Okeke advocated that DisCos must be adequately capitalized, adding that many of them carry a heavy burden of debt.
To this end, he said no DISCO should operate without at least $250m in shareholder funds and called on the Federal Government to be decisive in addressing the issue.
He said: “For any investment in the power sector to be viable, investors must be assured of cost recovery. There are only two ways to achieve this: either the Government pays or consumers do. I commend the Government’s recent decision to transfer costs to, consumers, starting with Band A.
“Ultimately, consumers will bear a fair share of the cost of the power they consume. However, this equation has a critical weak link — the Distribution Companies (DISCOs), who directly interface with consumers. As things stand, even with tariff adjustments, many DISCOs struggle to pay their total bills to the entire value chain.
“Unfortunately, most DISCOs have negative equity, leaving them with little to no financial stake. This situation must change. Ideally, no DISCO should operate without at least USD 250m in shareholder funds. Just as the Central Bank of Nigeria has raised capital requirements for banks to ensure their stability and capacity to serve, the Nigerian Electricity Regulatory Commission (NERC) should mandate similar capitalization standards for DISCOs.
Earlier in his address, the Chairman of PCAN, Comrade Obas Esiedesa, said the workshop was organised to chart a new course for the country’s power sector.
He said: “As journalists covering the power sector, we are concerned that the sector has seen more discussions than actual progress. Despite the constant dialogue, each step forward often seems to bring about setbacks.
“Our concerns are heightened by the fact that these issues persist despite the Service-Based Tariff and the increased tariffs for Band A customers.
“As journalists, we find the state of the sector disheartening, and I believe I speak for many when I say that we cannot be silent.
“Today’s workshop is a call to action. We are here to discuss meaningful ways to move forward, and I am glad to see so many industry leaders in attendance.”
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