This week, we put together some random thoughts of the author about some issues in the emerging electric power sector in Nigeria and other relevant matters that are worth considering.
My Thoughts
Can investors in the newly privatised power companies neglect improvements in power supply for revenue generation and servicing their indebtedness?
I doubt that they all are only concerned about the repayment of funds obtained from financiers as I understand that there is on the average, a one year moratorium before they begin to service their loans. Also, recall that these companies have performance targets so it is unlikely that they do not care much about service delivery as they do, in connection with repayment of loans. What makes it really improbable that they are not focused on service delivery is the fact that the government, through the BPE, has a call option on those shares which they bought and the BPE can actually take over those companies, for paltry sums, if the new owners do not meet pre-agreed service delivery levels within the periods specified in their performance agreements.
Consequent upon the foregoing, I do not think that they are not focused on service delivery.
The foregoing notwithstanding, it is very germane to note that the power sector had been neglected for several decades and it would take more than a few weeks or months to put things right. For several years, as population grew in geometric progression, no additional power infrastructure was provided. The last grid enhancement was done in the year 1987. Therefore, I do not think anyone would realistically expect that things would change drastically immediately; especially since the new owners would face teething problems and would need to carry out audits to be able to properly situate where most of their efforts should be.
On the termination of the employment of some old staff of the now privatized power generation and distribution companies
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