The federal government and core investors in electricity distribution companies (DisCos) are to raise $4.3 billion to recapitalise the firms and improve their services.
Usman Mohammed, managing director of Transmission Company of Nigeria (TCN), disclosed this to reporters, saying the fund is meant to upgrade distribution network of DisCos.
According to him, the federal government will provide $1.7 billion out of the fund, while the private investors are to make available the remaining.
The federal government holds 40 percent shares in the power firms.
Mohammed said the new investment into the distribution network might attract increase in electricity tariff.
“This money can be raised. The government was about to collect $1 billion from the Word Bank for DisCos to finance the capitalization of the DisCos. AfDB and others are talking about another $1 billion for distribution expansion,” he said.
“NERC should do a regulation consistent with the declaration of ECOWAS directive that all procurement of DisCos and transmission should be done competitively so that this money that will come in will not be squandered by people giving contracts to their cousins and wives.
“Tariff may go up as a result of the fact that there is going to be repayment of those capital and also payment of interest.
“What we are saying is that to correct this thing, we have to recapitalise the DisCos. The recapitalisation requires $4.3billion, which means they have to bring the balance. What we are saying is that government cannot be passive anymore.
“Government ownership should be represented by four directors just like proportional to the investment. Government should bring its own 40 per cent capital. We have simulated the grid to examine the investment requirement by the DisCos. And we have come to $4.3 billion. Government is going to bring its 40 percent of $4.3 billion which is about $1.7 billion.”