Chineme Okafor in Abuja
The Chairman of Transcorp Ughelli Power, Mr. Tony Elumelu, has said the Nigerian power sector is abourt to collapse as operators reel under various operational challenges which include unpaid bills for supplies, and foreign exchange differentials, warning that the generation companies (Gencos) may not be able to hold up for too long before giving up.
Speaking in an interview with CNBC which THISDAY monitored yesterday in Abuja, Elumelu said the geberation companies (Gencos) were currently subsidising electricity generation in Nigeria.
He said this development was unhealthy to the operations of the Gencos.
According to him, a lot of the Gencos including Transcorp have lost share value on the back of the sector’s challenges. He explained that such could affect future investments in the sector if left unaddressed.
Specifically, Elumelu noted that payment delays and debts to Gencos, poor gas supplies and certain unhealthy governance issues were major contributors to the sector’s challenges.
“The current government is interested in diversifying the economy of this country, I will say that we can only make progress in that direction if we fix power. Power to me is one of the most critical agenda that we as a country should have at this time but the power sector appear to be threatened,” said Elumelu.
He further stated: “A lot is dependent on the power sector. I speak as an investor in that sector and my heart bleeds when I see a country that is endowed with a lot especially gas and a huge market like Nigeria, a market with enterprising people who are ready to move mountains if they are set free with improved access to electricity and we are not doing so much.
“This is a sector that initially attracted private sector excitement and investment. I know the price share of Transcorp shot up when we did the acquisition but today, the story is different not because we as a company are not doing well, it is different because the agency of government that has the responsibility of making sure that this sector truly delivers on its potentials is not doing well enough.”
He said on debts owed Transcorp by the sector: “We are owed a lot of money, Transcorp Power is owed almost N50 billion, by the time we put in the invoice for this month, it will be almost N55 billion. How do you survive in this type of situation?
“And other Gencos I know are actually dying, we are struggling because of our diversified resource base, so something urgent must be done about this.
“The truth is Transcorp Power as a key operator in the sector is struggling and if we are struggling, you can imagine what other operators are going through. There is a lot of debt being owed to us. Liquidity is an issue and there is gas vandalism, of course you will not blame government so much because there is a lot of vandalism going on but where we are located, there are some idle gas fields there, if government could allow us produce gas from the gas field we are seating on, we will have our own regular supply of gas and then we can do more because we have capacity to do over 700 megawatts of electricity.
“GE just completed installation of turbines that will take our capacity to over 750MW and by the end of March, we should be 815MW. We are excited about this sector because we know what power can do for this country, but we need to fix some of these issues,” he added.
He stated: “We are all living in a borrowed time, it is a matter of time before something drastic is done.”
Elemelu also said of his personal assessment of operators in the sector: “I believe the Gencos have demonstrated capabilities, some of the Discos in my viewpoint, I do not see seriousness and so government should engage more with these Discos and see how a marshal plan can be put in place.
“It is unfortunate, may be the wrong people bought some of these Discos. People who have capacity should own the Discos. The generating companies are reeling and suffering, there is a limit to how far we can subsidise the system because that to me is what is happening today.
