Electricity transmission tower. PHOTO: Pinterest

The Association of Nigerian Electricity Distributors has appealed to the National Assembly to reconsider stoppage of bond for electricity companies to avoid collapse of the power sector.

The association’s Executive Director on research and advocacy Sunday Oduntan made the appeal.

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On October 12, the senate passed a resolution stopping the Federal Ministry of Power, Works and Housing from using the Nigeria Bulk Electricity Trading Company (NBET) to give electricity companies a N309 billion bond.

But Oduntan believes the action would negatively affect electricity distribution companies.

According to him, the sector had a huge liquidity gap which was being bridged by Federal government’s intervention in form of bond.

He added that electricity consumers no longer show willingness to pay bills.

“Government’s ministries, departments and agencies are owing the sector over N100 billion electricity bills.

The executive director disclosed that bond was a form of promissory notes given to power sector in form of loan to cover some shortfalls in the industry.

No chance of obtaining loans

He also stated that distribution companies had no chances of obtaining bank loans because banks believed that it would be difficult to recover loans given to them.

“We are appealing to the senate to revisit its stand on stoppage of bond for electricity companies.

“At present, electricity companies need bond to balance the liquidity gap in the sector.

“Government is assisting the sector through this medium.

“With stoppage of this intervention, DISCOs will find it difficult to buy new transformers and meters, while Generation Companies (GENCOs) will not have resources to service their plants.

“The stoppage of this bond with contribute to collapse of the power sector,” he said.