The Minister of Power, Adebayo Adelabu, has warned electricity distribution companies across the country that the Federal Government will enforce stricter conditions for the renewal of their operational licences, including a new capital adequacy requirement.
Adelabu, who spoke on Tuesday at the Nigeria Energy Leadership Summit in Lagos, said many of the DisCos were heavily indebted and undercapitalised, threatening the financial health of the nation’s electricity sector.
He explained that several ongoing federal power programmes, including the Presidential Power Initiative, popularly known as the Siemens Project, are funded through loans that will become financial liabilities to the DisCos.
Adelabu also revealed that other power sector interventions, such as the Presidential Metering Initiative, jointly funded by the federal and state governments to the tune of $700bn, and the World Bank-funded $500m Distribution Sector Recovery Programme, are additional debt exposures that must be managed prudently. The minister said the government would not tolerate financially weak operators who cannot meet the new requirements, adding that DisCos unable to recapitalise or meet their obligations risk losing their licences.