*As CBN pays additional N240bn as CAPEX for DisCos
Lagos — The federal government is considering selling the Zungeru hydro power project to private investors, SweetcrudeReports has learnt.
According to findings, private investors have already expressed interest in acquiring the project, and the federal government is considering disposing the plant to preferred investors.
The Zungeru project located at Zungeru, Niger state is estimated to generate 2.64 billion kWh of electricity a year to meet close to 10% of Nigeria’s total domestic energy needs.
Meanwhile, despite privatisation of the power sector, the Central Bank of Nigeria, CBN is making provision for an additional N240bn as emergency capital expenditure, CAPEX for electricity distribution companies, DisCos.
According to a document ‘Update on the Nigeria Electricity Supply Industry,’ the fund was meant for interface repairs, to boost capacities of power distribution companies to distribute electricity, and for network improvements by power firms.
The Appex bank had recently made available N120 billion CAPEX fund to improve infrastructure for the tariff classes in the ongoing metering programme.
“N240bn in emergency CAPEX (capital expenditure) provided by the CBN for interface repairs and (for) Discos in network improvements,” the document drafted by the ministry of power partly read.
The government, however, stated that it had recorded return of investment with the N105bn Afam III, IV, V power plants sale, and the disposition of Yola Disco at N19bn.
The government explained that macroeconomic factors such as changes in foreign exchange rate were impacting on cost reflective tariff in the power sector.
It described the impact of inflation as limited but rising, adding that the delays in implementation of gas pricing might impact electricity tariff in July.
On the pace of capital expenditure investments, the government observed that there was a need to boost power supply in order to limit tariff impact, as the CAPEX investments inaugurated in June should be accelerated.
“The capacity of the market to spend/absorb CAPEX funds needs to ramp up,” the power ministry said.
The power sector was privatised and unbundled into three, generation, transmission and distribution in November 2013.
While a total of 11 distribution companies and six generation companies were handed over to private investors, the Transmission Company of Nigeria, TCN remained under the federal government.
However, many years down the line, privatisation of the sector is yet to yield the desired result. The sector has been plagued with liquidity concerns, prompting the federal government to keep investing through various intervention funds.