The Transmission Company of Nigeria, says one of the conditions that could make it waive the N270 billion debt owed by Power distribution Companies (DisCos) is for them to recapitalize.
The Managing Director of TCN, Usman Mohammed who disclosed this, said wiping the slate clean for DisCos had become crucial as they seemed not to have a solution to their debt problem.
“This is why we are proposing recapitalisation, where government should bring its own 40% in the distribution companies, while the owners of the DisDos bring their own 60%.
“For TCN, the DisCos are owing us about N270 billion right now. We are ready to forgo that N270bn in as much as we have a market that can work. So we are saying reset the books, remove their debt and make their books clean.”
The market is collapsing in Mohammed’s view, and the solution to prevent a total collapse is by throwing the DisCos a lifeline such as the debt waiver. It was also necessary to avoid canceling the privatisation scheme which he said would send a wrong signal to the international market.
“These monies were short term in nature, very expensive and not ideal for this kind of investment and this is one of the major problems that we are facing right now in the sector.”
Meanwhile, the distributing companies are not interested in TCN’s offer until investors have a blueprint disclosing how their investments in the power sector can be recovered.
Until then, it remains uncertain if the DisCos will recapitalise their companies as requested by TCN.
“It is my hope that the PIP guidelines, if implemented faithfully, efficiently and consistently, will provide this pathway, as necessary to re-orientate the sector towards commercial viability and sustainability,” The Chief Executive Officer, Association of Nigerian Electricity Distrbutors, Azu Obiaya said in defense of the DisCos.
The privatisation of the power sector took place six years ago under the administration of President Goodluck Jonathan. The administration shared the assets Power Holding Company of Nigeria (PHCN) among six generation companies and eleven distribution companies.
These private distribution companies are said to lack long term investments, so it exposed them to debt, and when banks came knocking, they applied for loans.
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