About two years after the escrowing of accounts belonging to 11 distribution companies (DisCos) by the Central Bank of Nigeria (CBN), stakeholders, yesterday, weighed options available to the country\u2019s debt-laden power sector.<\/p>\n\n\n\n
By escrowing, the accounts were locked, with cash allowed in and withdrawals by DisCos blocked. The accruing funds are thereafter allocated based on priority.<\/p>\n\n\n\n
Under the original arrangement, loan repayment to the Federal Government was the priority followed by 100 per cent payment of market operators invoices, as well as invoices from the Nigerian Bulk Electricity Trading Company before others.<\/p>\n\n\n\n
Fuelled by tariff shortfall, receivable collection, technical, commercial and collection losses, financial liquidity in the sector now hovers around N4t, affecting the balance sheet of commercial banks and reducing the sector\u2019s attractiveness to needed investments.<\/p>\n\n\n\n
It would be recalled that loans to the power sector from commercial banks stand at about N819.97b, by the third quarter of last year, as banks are already warning that the loans could increase in the cost of risk for these banks.<\/p>\n\n\n\n
National Bureau of Statistics had said the non-performing loans in the power sector stood at N33.22 billion at the end of 2020, out of N1.23 trillion NPLs recorded by banks.<\/p>\n\n\n\n
While the financial crisis, especially unpaid debt led to rancorous development at the Abuja Electricity Distribution Company, the CBN reported that the combined indebtedness of power firms in the country currently stands at about N820b.<\/p>\n\n\n\n
However, stakeholders insisted that there may have been a leeway for the power sector through the escrowing of the accounts by the CBN, as the development may have halted the misappropriation of funds by the utility companies, introduced transparency, increase revenue, enable the government to recover monies loaned to the companies while reducing the financial burden in the sector.<\/p>\n\n\n\n
Be that as it may, others are demanding measures that would compel DisCos to perform, noting that escrowing accounts was only a temporary solution. The Presidency, however, informed that escrowing the accounts led to an increase in the sector\u2019s revenue by over 100 per cent.<\/p>\n\n\n\n
Indeed, between July and December 2020, industry statistics indicated that electricity market revenue grew by 10.55 per cent to N272.47b. In the same period in 2019, the revenue was N246.46. The development was then linked to the imposition of restrictions on DisCos\u2019 revenue collection accounts.<\/p>\n\n\n\n
The Special Assistant to the President on Infrastructure, Ahmed Zakari, confirmed to The Guardian that escrowing the account\u2019s led to a significant increase in upstream remittance from DisCos to NBET\/TCN.<\/p>\n\n\n\n
According to him- these remittances have increased by over 100 per cent, which has aided liquidity flow that has positively affected the operations of generation companies and the TCN.<\/p>\n\n\n
About two years after the escrowing of accounts belonging to 11 distribution companies (DisCos) by the Central Bank of Nigeria (CBN), stakeholders, yesterday, weighed options available to the country\u2019s debt-laden power sector. By escrowing, the accounts were locked, with cash allowed in and withdrawals by DisCos blocked. The accruing funds are thereafter allocated based on […]<\/p>\n","protected":false},"author":2,"featured_media":21807,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[126],"tags":[256],"class_list":["post-39480","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-trade-and-industry","tag-discos","has-post-title","has-post-date","has-post-category","has-post-tag","has-post-comment","has-post-author",""],"yoast_head":"\n