Are Gencos generating more debt than power?

The Nigerian electricity industry has been under a lot of pressure. Gas supply is low and power generation has been severely affected.

More worrying is that they are owned hundreds of billions of naira in debts by its customers. N93 billion of that debt is owed by Ministries and Department of Government (MDA’s). That debt cascades down the value chain of the power sector with most of it owed to power generating companies.

The power sector value chain is such that power is generated by the Gencos and sold to the Marker Operators (MO), who then wheel the power through the grid (run by transmission Company) to the Discos and then to consumers. A reverse flow starts when the customers pay their bills to the Discos and then the Discos pay the Market Operators (MO) who then pay the Gencos and then the Gencos pay the gas suppliers.

For the Gencos, the above schematic is now more on paper than in reality. They hardly get enough gas to generate electricity and even when gas is available, they lack the funds to pay for it. Gencos are currently thought to be owed about N50 billion by power distribution companies in Nigeria.

With distribution debts expected to remain high, it’s likely that the Gencos are more likely to generate more debt for every single megawatt of power generated

Join our BBM channel for instant updates : C0030863D

Comments

Collapsed banks in Ghana recovered only $142 million out of $2 billion loans, Bank of Ghana Governor reveals.

The Governor of the Bank of Ghana, Dr Ernest Addison says out of the $2 billion (GHS10.1 billion) worth of loans taken by the receivers of some nine banks which collapsed in the country, only $142 million (GHS731 million) has been received. The Governor of the Bank of Ghana (BoG), Dr Ernest Addison The nine banks were UT Bank, Capital Bank, Sovereign, Unibank, Construction Bank, The Royal Bank, Heritage Bank, Premium Bank and Beige Bank. According to him, the receivership process has been painstakingly slow with other loan defaulters and shareholders of the defunct banks engaging in frivolous legal cases to sabotage the process. “The process has progressed slowly as out of the total loans of $2 billion (GH¢10.1 billion) taken over by the Receivers, total recoveries so far is in excess of $142 million (GH₵ 731 million) and this has been achieved through loan repayments by customers; repayment of placements; sale of vehicles; liquidation of bonds; and from...

BOOM: Nigeria’s External Reserves Drops To Lowest In 11 Years

Nigeria’s foreign exchange reserve fell to $25,780,765,483 (25.78 billion) as of August 16, the lowest we have seen since 2005. The drop was down 2.11% from a month ago. The Nations external reserves dropped below $26 billion for the first time on the 5th of August 2016 after it closed at about $25,971,610,949. In fact, the external reserves has dropped by about $480 million dollars in August alone compared to just $100 million in the whole of July. Ironically, the current balance of $25.9 billion is worth about 80% more than what it was in Naira following the depreciation of the naira after it was floated. The CBN has in the past few days ramped up sales of dollars at the interbank in the hope that it will create liquidity in a market that is yawning gape to swallow forex after nearly almost two years of intense rationing by the CBN. The Naira weakened to its lowest ever at the interbank after it closed at about N362.5/$1 in midday trading. The Naira will eventua...

Alert: Naira Gains A Massive 5% Against the Dollar

The exchange rate rebounded on Friday to close at N308 at the official interbank market. The local currency gained about 5.2% reversing the N325 it closed with on Thursday. According to reports, the gains was mostly due to a sale of forex by the Central Bank of Nigeria providing enough liquidity to meet the demand currently in the market. The naira has closed at an all time low of N364 to the dollar on Thursday following a surge in demand. The central bank has been selling dollars almost daily to boost liquidity and support the naira. Join our BBM channel for instant updates : C0030863D

The Finance Dude

Search This Blog