Four years after its privatisation, Nigeria’s power Sector is languishing as managers of the power firms complain of lack of access to financing for the huge capital expenditure required to significantly boost power supply in the country, The Punch reports.
Many of the banks, who lent massively to the sector during the privatisation, are now scared of injecting more funds as they are struggling to ensure the repayment of the acquisition loans they granted to the core investors in the power firms. As of the end of December 2016, 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 that sector stood at N726.29bn, according to the latest Financial Stability Report of the Central Bank of Nigeria.
The Vice-President/Head of Energy Research, Ecobank, Mr. Dolapo Oni, said in an interview; “They (banks) have decided not to put more money in the power sector. For all the money that was given out since 2013 – now we are going into 2018 – most banks have stretched out prepayment for another two to three years so that people can find it comfortable to pay.”
The World Bank said in a recent report that the weak financial situation of the electricity distribution companies coupled with their highly leveraged balance sheets had severely constrained their ability to access commercial financing. International lenders and investors, according to the Washington-based lender, also do not have appetite for financing since the sector is nascent and lacking the requisite mitigation arrangements to meet their risk acceptance criteria.
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