Operators of generation and distribution companies might be forced to close businesses in the face of huge losses they have encountered since the power sector was privatised.
Engr. Michael Uzoigwe, Group Leader, Generation at Sahara Power Group, disclosed this in Lagos, said investors in the electricity industry were yet to recoup their investment, including borrowed and personal fund, three years after privatisation.
His words, “The Nigerian power system is presently in trouble and if care is not taken, the business will shut down in six months time. Quote me on this. This is because those in the business have lost their investments. They have invested billions and keep borrowing yet, their monies can’t be recouped not to mention of making the profit.”
Another reason why the generation and distribution companies might shut down in the next six month, he said, is the cost of gas and purchase of spare parts for power plants.
Uzoigwe said gas which is abundant in the country and produced in Nigeria is being sold to generation companies in the dollar which he described as unsustainable due to the current exchange rate and policy.
However, he warned that Gencos and Discos can not break even based on the current price of gas, adding that these companies were also battling with the price of spare parts which are being imported into Nigeria.
According to him, “Gas is being sold to generation companies in dollars and these companies cannot break even with the current dollar price together with the scarcity of foreign exchange.
He added, “Scarcity of foreign exchange has not enabled generation companies to buy spare parts for their power plant. This means that these plants cannot be maintained.”