Nigeria risk more blackouts than it is experiencing at the moment as currency restrictions imposed by the Central Bank is threatening the existence of power companies that are unable to buy spare parts to meet routine maintenance.
Many distribution companies (DISCOS) also say if the capital control continues, they may be forced to halt operations and suspend future expansion as it is becoming increasingly difficult to meet obligations and commitments to creditors and lenders.
Industry experts posited that since transformers and metering components are imported, a relaxation of the restriction by the apex body will ease the pains of operators in the power sector as many of them are running out of stocks that needs urgent replenishment.
The central bank of Africa’s largest economy and oil producer has imposed foreign exchange restrictions on 41 items as it seeks to protect reserve from continued depleting as a result of the continued fall in oil price by 70 percent to $32 a barrel.
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With the currency pegged at N199-N199, many manufacturers and importers say the official rate is inaccessible and they are forced to buy at N390 at the parallel market. Analysts say the currency regime has caused huge capital flight and has slowed economic activities.
Economic growth has slowed to 2.8 percent, from 6.4 percent in 2014, while inflation has risen to 9.6 percent, according to the Bureau of Statistics (NBS).
Nigeria’s external reserves stood at $27.840 billion as at February, representing a 1 percent decrease from $28.09 billion December last year.
This is not the time for power companies to sink or go bust as a result of the aforementioned uncertainties given the faltering electricity situation in the country.
The country’s power sector is hard hit by electricity theft, non-payment and delay in payment of bills, aging use of power infrastructure, inefficient use of human resources and lack of automated management.
Nigeria needs 20000 MW electricity supplies to meet daily rising demand but it does less than 6000 MW. Electricity supplies serve less than 50 percent of the total population (173 million in 2014). Half the population is being left behind.
Industry experts posited that the devaluation of the currency could also see tariffs spike as the MYTO has an embedded macro- adjustment of which the value of the naira is a component.