Some of the recently privatised power firms may not be able to meet their loan obligation to the banks that financed the privatisation process following losses being recorded in their operation, top industry sources have said.
The first loan instalment of majority of the power firms will be due in June and the development, according to top banking officials, is causing panic among some bank executives whose institutions have been deeply involved in the privatisation process.
Nigerian banks had provided N280bn for the privatisation process.
Specifically, the banks were responsible for raising over 70 per cent (about N280bn) of the balance paid by investors for the 14 successor companies to the defunct Power Holding Company of Nigeria.
The Federal Government realised about N400bn from the privatisation transaction.
The chief executive officer of a bank , who spoke under condition of anonymity because of the sensitive nature of the issue, said, “There are fears in the banking quarters now as the loans get due by June. Top banking officials are concerned because they are not too sure most of the power firms will be able to meet up with the first instalment.
“The reason they are worried is that most of the power firms have not been making money. Some are running at serious losses. So the probability of meeting up is slim. For the Gencos, the issue of gas to power has been a major problem. This is why we are sure some of them may not meet up with this first instalment.”
The Africa Finance Corporation and some Nigerian banks namely: United Bank for Africa Plc, FCMB and Fidelity Bank, committed a total of $215m (N34.4bn) in the form of a debt financing facility for the acquisition of Ughelli Power Plc.
The AFC said its aggregate financing commitment for the acquisition was about $55m (N8.8bn), while UBA, FCMB and Fidelity provided the balance.
GTBank and the AFC had sealed $170m medium-term syndicated acquisition facility for Mainstream Energy Solutions Limited towards the acquisition of Kainji Hydro Electric Plc.
The Chief Executive Officer, GTBank, Mr. Segun Agbaje, said the financing underpinned the lender’s belief in, and support for, the growth of the power sector.
UBA Plc and UBA Capital Plc also played a leading adviser role in the acquisition of three out of the six generation companies in addition to a distribution company.
The bank said it successfully arranged the debt financing of $215m and equity for the acquisition of Ughelli Power by Transcorp Ughelli Power Limited.
As the financial adviser and mandated lead arranger, UBA said it successfully arranged debt financing of $68m as well as secured equity investment from a strategic and technical investor for the acquisition of the Shiroro Hydroelectric Power Plc by North South Power Company Limited.
The Group Chief Executive Officer, UBA Capital Plc, Mr. Rasheed Olaoluwa, said the investment group had been an important partner in the privatisation process and was currently advising three out of the six generation companies.
UBA Capital also arranged the debt financing of $121m for the acquisition of the Abuja Electricity Distribution Company Plc by Kann Utility Company Limited.
On Friday, UBA, GTB and FCMB did not respond immediately to an enquiry sent to them on the matter.
However, the Deputy Managing Director, Diamond Bank, Mrs. Caroline Anyanwu, said the bank relied on its experience in the oil and gas sector to select power firms it financed and, as such, the bank did not fall into some of the pitfalls.culled
Specifically, she said the bank selected power firms that had their base very close to where they could easily get gas to generate power.
Hence, the firms, she stressed, did not have such financial issues.
Aaaahh... The two banks I use? Abeg o. These things work in other countries, when you come to nigeria nothing works! Mtchew.
ReplyDeleteZuma missing diamondblinqZ
Mehn, this note to long abeg.... But i pray solution to whatever problem it is is brought to light.....
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***CURRENTLY IN JUPITER***
Block head 4m LIB! AKA Lazy drone!!
Delete#Hot Ice
They always give loans to those who can't pay back.
ReplyDeleteIs it today its coming out!!!! inside source confirm they had approached the President late last year asking for Power subsidy else the system will crash in 8 month due to debt with the banks. Presidency had a meeting with the bankers and Discos where it was agree that they (bankers) should relax till after election has energy subsidy timing was not the best to discuss at that time. So Stella check into your contact with the Discos and you will get more info. This politicians bought over distribution companies thinking they will make money like the telecoms without any idea of the bizness and now they are in total debt to the banks since its all borrowed money and now they want govt to pay them subsidy its just a scam and GEJ is playing along since he want re election.
ReplyDeleteAll this one na grammar sha. Oga Jona abeg no be all the former staff of PHCN dem don pay o. People wen retire some months b4 the privatization still neva collect shishi. Aunty Stella na die we dey.
ReplyDeleteSAPELE POWER STATION IN PARTICULAR
Dreamz stop disgracing your parents who sent you to school......stupid block head..obviously you have nothing meaningful to contribute so for u it will be too long.....you are one of the reason this country is not progressing......wasted youth, u better go get a life and stop being stupid at your age......silly arsewipe
ReplyDeleteWhy spread falsehood? Which politicians bought Power firms?
ReplyDeleteFor your information, credible professionals invested in this sector. these firms have a huge backlog of problems including ancient infrastructure, many staff with questionable competency, a govt work culture where performance was not a focus, and a regulator pegging cost of electricity at less than cost of distributing it.
No one who bought expected to make a profit in the first few years. The utility business has always been done from a long term investment outlook.if you take an indepth look at these businesses and the huge odds they face, you will understand that.
For your information, power theft (many Nigerians do NOT pay their bills or tamper with their meters, many expect electricity to be free - a social service) and network vandalism - everyday, criminal elements are cutting off wires and other elements from these networks to sell on the black market are the 2 biggest reasons why we don't have light.
The reform of the power sector and the journey to reliable, affordable power is a marathon. it cant be done without partnership between the companies, regulators and general populace.
You want better electricity supply? Pay your bills, report vandalism and do your best to minimize power waste in your premises. That is the way forward. Making incendiary, misleading remarks in public fora will not help any of us.
At the end of the day, we all need this initiative to work. It is not about politics. It is about a better quality of life for all of us. Yes, I am a Nigerian, and no I don't work for or own any electricity company. I just happen to be privy to the dyanmics in that industry and anyone can be if you look for the information. All this negativity will get us nowhere.
Pls is there any, just one, sector that is working in this country?
ReplyDeleteIn as much as i love this country, it is had not to get discouraged with everything going on.