Daily Watch – GenCos plan to sue FG agencies over power, Remaining NIPPs to be privatised

The Bureau of Public Enterprises has announced the final plan to privatise the ten remaining National Integrated Power Projects this year in a bid to bolster power supply. The DG, BPE, Alex Okoh, also said that the FG-owned satellite communications operator, NigComSat, is also billed for privatisation to enhance its competitive edge. Okoh made the announcements during the signing of an MoU between the privatisation agency and an infrastructure credit enhancement firm, InfraCredit. The MoU guarantees a longer tenor credit of up to 15 years for prospective investors in the NIPPs. The hand over of the NIPPs to the eventual investors is projected for the first quarter of 2020 as a committee to prepare the privatisation transaction of the company has been constituted with a target of consummating it this year. The MoU with the InfraCredit is aimed at de-risking the power sector investment and attract competent investors with a view to avoiding the pitfalls of the power sector privatisation characterised by epileptic service delivery arising from short tenor financing. InfraCredit, has committed to guaranteeing as much as ₦300 billion of financing for the power divestment transaction to investors.

The CBN has barred banks from buying bills for their own accounts as a way of stepping up a campaign to get credit flowing. This move is intended to force the banks to lend rather than invest in government debt. The CBN had earlier limited the size of interest-bearing deposits it would hold for banks, the latest in a series of measures aimed at reviving a sluggish economy. The lender, which had not issued market stabilisation bills for about a week before last Thursday’s auction, told banks that their bids must be backed by customer demand. In the past, banks bought government debt rather than assume risk by lending. At Thursday’s open market auction, the CBN offered ₦75 billion ($245.14 million) of bills, drawing demand totaling ₦475 billion for the various maturities. The regulator sold one-year bills at a yield of 12.25 percent. The CBN has been issuing securities at high yields to mop up naira, a policy it maintained for more than two years to attract foreign inflows into bonds and support the naira. It was unclear which option the regulator wants to pursue: boosting credit flow locally or maintaining a stable currency in the face of high inflation and dollar shortages. At its last rate meeting in March, the bank cut rates by 50 basis points for the first time since November 2015, saying it wanted to signal a new direction.

Power generation companies may sue selected agencies of the FG in the sector over “lots of irregularities” in the industry, including the loss of about 6,625MW of electricity. According to the Punch, the 6,625MW of energy was not yielding revenue to the GenCos, despite supplying a sizeable amount of power to the grid. Going by Section 76(1a) of the Electric Power Sector Reform Act, which stipulated that utilities should be given the opportunity to recover their efficient operating costs and a reasonable return, which the Gencos said had not been the case. The market was currently using wheeled energy to work-back the generation capacity of generators and was using same to represent the available capacity, which were aberrations. The Executive Secretary, Association of Power Generation Companies, Joy Ogaji, said that GenCos were losing over 6GW of energy, as they make no revenue from that quantum of power. The break down of the loss showed that the technical and operational inefficiencies by TCN and Discos, negatively impact the GenCos in different ways. With a total available generation capacity of more than 7.5GW and maximum (TCN) wheeling capacity of not more than 5.5GW, there is a recurring instance of about 2GW idle generation, and the DisCos have not proven to be able to distribute more than 4.5GW continuously, leaving another 1GW of generation capacity unutilised.

Data from a media intelligence and audit agency, P+ Measurement Services, has shown that in the month of June 2019, 21 Nigerian banks spent the sum of ₦427.8 million on 5,887 advertisements on various local and foreign media platforms. The survey done in partnership with MediaTrak, shows that the amount was ₦35.7 million less than what was expended in May. The most preferred media platforms for placement of the adverts by the banks in the period were Ebony Life (DStv), CNN (DStv), Supersport Blitz (DStv), Classic FM Lagos, Beat FM Lagos, Urban Radio, ThisDay, Business Day and The Punch. A breakdown of the survey showed that a total of 1,325 adverts were placed on television, 4,079 adverts on radio stations, while the print media platforms received 483 adverts from banks in the period. The survey further indicated that the banks spent ₦123.8 million for their adverts on television stations, ₦25.1 million for radio adverts and ₦279 million for the print media adverts. However, the TV media adverts in the banking industry for June witnessed a decrease in media spending, in contrast to May, with a reduced expenditure of ₦26.5 million, while radio media adverts in June also saw a decrease in media spend, compared to May with a reduced spend of ₦19.6 million and the print media adverts in the banking industry for June saw an increase in media spend, compared to May with an increased spend of ₦10.4 million.