News of Fidelity Bank Plc taking over the boards of three electricity distribution companies (discos) should no longer be surprising. Yesterday’s story explained why the discos—including Fidelity’s Benin, Kano and Kaduna—couldn’t repay loans they acquired in 2013 to fund their privatisation.
This is just the latest in a string of disco takeovers. Before this news story broke, we had heard of UBA taking over Abuja’s disco in December last year and AMCON’s takeover of Ibadan disco earlier this year. As Noelle, Stears’ senior energy analyst, explained, the entire electricity value chain is plagued with various issues, but the most significant is the sector’s liquidity.
From metering issues to energy theft, the sector's lack of funds makes it nearly impossible to fix these issues. Given that the discos are the collection agents of the industry, their poor financial performance affects the rest of the value chain, including the transmission company of Nigeria (TCN) and the generation companies (Gencos).
Despite various government and CBN interventions, these have not been enough to lift the sector out of the trenches. Some interventions include the ₦213 billion Nigerian Electricity Market Stabilization Facility (NEMSF), ₦600 billion tariff shortfall (subsidy) intervention and the recently disbursed ₦120 billion intervention