Sanda: Discos Unable to Attract Funding Due to Liquidity Challenge in Power Sector

Peter Uzoho

The inability of power distribution companies (Discos) in Nigeria to access necessary external funding required for capital projects has been attributed to the liquidity issues plaguing the electricity sector in the country.

The Managing Director and Chief Executive Officer of the Eko Electricity Distribution Company (EKEDC), Dr Tinuade Sanda, stated this during an exclusive interview with THISDAY.

She explained that Nigerian banks were not disposed to giving Discos long-term lending facility but instead; offer them loans on a short and medium term basis, which she said was not enough for them.

“What you have today is that, we are not able to attract necessary funding that is required because of the issues the sector is plagued with. Lending from the banking sector in Nigeria is short to medium term, none of them is ready for the long term funding which is what the sector needs,” Sanda explained.

To continue to improve power supply to consumers, she said the company was no longer relying on the grid that was not sufficient, as they devised alternative sources of power for distribution to the consumers.

Sanda, however, pointed out that the current regime of the power regulators has been very collaborative with the operators. According to her, the regulators are forward-thinking and look for innovative ideas that would help improve the sector’s liquidity and address the challenges the sector is facing. 

She said one of the major challenges the sector is facing is metering, noting: “you keep hearing consumers shouting estimated bill, it’s real and it’s a concern even for us as Discos. I also want to sell my energy and be able to bill accurately what consumers have utilised.”

She said the Nigerian Electricity Regulatory Commission (NERC) was now addressing the metering challenge with the introduction of a meter asset fund, which is a tariff model where 75 kobo is deducted from every kilowatt hour of energy supplied.  

“So, that fund is what they are going to build up where Discos can go to that fund, take a loan and meter consumers,”Sanda explained.

She said that one of the company’s plans was to ensure that they were able to meter about 30 per cent of unmetered consumers within their network area. 

“I’ve done the metering plan for the next three years and one of the plans is that, year-on-year for the next three years, I close that metering gap. And of course, you must know that as I’m closing the gap, some meters are also due for replacement because of their useful life. 

“So, we also planned that, on a year-to-year basis, the ones that are due, we also replace them. But the gap that we currently have, I want to close that out in the next three years and then, subsequently start addressing the inaccurate meters that have expired their useful life. So, those are the things we are doing, “she added.