Discos blame different exchange rates for liquidity gap in the power sector
Electricity Distribution Companies in Nigeria (Discos) have attributed the current liquidity situation in the power sector to poor payments made by consumers for electricity distributed. The Discos claim they purchase electricity from generation companies at an exchange rate of N305 per dollar and sell at an exchange rate of N198.98 per dollar.
Speaking at an energy management forum organized by Siemens in Lagos, the Managing Director and Chief Executive Officer of Eko Electricity Distribution Company (EKEDC), Oladele Amoda, explained that this difference in exchange rate has brought about a liquidity gap in the sector and strongly affected the capacity of companies to replace worn-out equipment. “In Eko Disco, for instance, some assets are 60 years old and need to be replaced but we have serious challenge of access to finance,” he said.
Commenting on the crisis, the Chief Executive Officer of Siemens Limited, Onyeche Tifase, noted that Nigeria’s electricity distribution system and its traffic situation are similar to that of India but the Asian country is far ahead of Nigeria in power generation. She added that her company is willing to assist investors in managing the crisis.
“We generate energy and we can also manage it to be cost-effective. In Nigeria, we are still talking about cash flow issues and obsolete equipment; in other countries, they are talking about intelligence, smart race, and diversity of energy mix. We believe that Siemens can get the roadmap on how things can be done in Nigeria’s power sector,” she explained.