Azura Power West Africa Managing Director Edu Okeke yesterday called for $500 million market capitalisation of the 11 Electricity Distribution Companies (DisCos) for any meaningful achievements to be recorded in the electricity value chain.
Okeke, who made the call at the 4th Power Correspondents Association of Nigeria (PCAN) annual workshop in Abuja, said many of the DisCos are struggling. According to him, the DisCos lack the capacity to make the necessary investments to recover costs effectively.
Okeke said the DisCos must be adequately capitalised, as many of them carry a heavy burden of debt and therefore need urgent reprieve.
According to him, no DisCo should operate without at least $250m in shareholder funds and called on the Federal Government to be decisive in addressing the issue.
The MD said: “For any investment in the power sector to be viable, investors must be assured of cost recovery “There are only two ways to achieve this: either the government pays or consumers do.
“I commend the government’s recent decision to transfer costs to, consumers, starting with Band A. “Ultimately, consumers will bear a fair share of the cost of the power they consume. However, this equation has a critical weak link — the DISCOs, who directly interface with consumers.
“As things stand, even with tariff adjustments, many DisCos struggle to pay their total bills to the entire value chain. “This is largely due to their lack of capacity to make the necessary in vestments to recover costs effectively.
“To enable meaningful progress, DisCos must be adequately capitalised. “Unfortunately, most DISCOs have negative equity, leaving them with little to no financial stake. “This situation must change. Ideally, no DisCo should operate without at least $250 million in shareholder funds.
“Just as the Central Bank of Nigeria has raised capital requirements for banks to ensure their stability and capacity to serve, the Nigerian Electricity Regulatory Commission (NERC) should mandate similar capitalisation standards for DisCos.”
