The Distribution Company of Nigeria (Disco’s) currently owes Transmission Company of Nigeria (TCN) a sum of N270 billion accumulated energy debt while the TCN is set to forgo this debt in order to help the Discos to recapitalize and save it from its imminent collapse.
The Discos comprises of 11 power distribution companies, these companies collectively owes the TCN the sum of N270 billion and is practically impossible for the companies to offset this debt. Subsequently, the waving of this debt has become necessary for recapitalization to save it from folding up.
TCN transmits the power generated by electricity generation companies to power distributors, who then distribute the product to its final consumers.
Meanwhile, Discos collect funds from power consumers as electricity bills on behalf of other operators in the sector; however, latest findings indicated that the sector indebtedness of the power distributors to TCN alone had grown to about N270bn.
Findings indicate that operators in the generation, transmission, regulatory and distribution wing of the industry were concerned about how the sector had been nose-diving since its privatization in the last five years.
To rescue the company from failing in the power market, Usman Mohammed, the Managing Director, TCN, revealed that it had become necessary to correct the error that was done during the sector privatization.
Mohammed, who disclosed this in Abuja on Friday, he revealed that most power assets were sold to investors that lacked the capacity for long term investments, consequently, this had created serious liquidity strain in the power market.
Nigeria’s power sector was officially privatized in November 2013 when the successor distribution and generation companies of the defunct Power Holding Company of Nigeria were sold and handed over to private investors.