Finding lasting solutions to power sector debts

The power sector in Nigeria continues to face significant challenges, with the Kaduna Electric Distribution Company at the center of discussions surrounding outstanding debts and potential license revocation. Chukwueloka Umeh, CEO of Century Power Generation, shed light on the situation in a recent interview with CNBC Africa. Umeh highlighted the complexities of the power industry in Nigeria, emphasizing the need for a conducive regulatory environment and sustainable investment strategies. Here are the key points from the interview: 1. Challenges in the Power Sector: Umeh pointed out that the current struggles in the power sector stem from the privatization process, where some companies lacking understanding of the industry acquired key assets. This mismatch led to unrealistic financial projections and hindered the ability to recoup revenues from customers. The discrepancy between assumed and actual Aggregate Technical, Commercial, and Collection (ATC&C) losses further exacerbated the financial strain on distribution companies. 2. Call for Regulatory Reforms: Umeh stressed the importance of revising regulatory frameworks to attract investors and foster growth in the sector. He highlighted the need for cost-reflective tariffs to ensure sustainable operations and incentivize private companies to invest in infrastructure development. Umeh also cautioned against reliance on government interventions, advocating instead for market-driven solutions to drive profitability and efficiency in the power industry. 3. Path to Sustainable Solutions: Looking ahead, Umeh called for a shift towards supporting private sector participation and creating an enabling environment for investment. He expressed skepticism towards government-led initiatives like the Presidential Power Initiative, emphasizing the role of private companies in driving innovation and capitalizing on market opportunities. Umeh urged the incoming administration to listen to industry players, streamline regulations, and empower private investors to drive the sector's transformation. Quote: "Relax your regulations enough to let us in. Allow private companies to engage in willing buyer-willing seller transactions to reflect true market value." - Chukwueloka Umeh, CEO, Century Power Generation The interview underscored the need for a comprehensive approach to addressing the challenges facing Nigeria's power sector. By prioritizing regulatory reforms, private sector involvement, and market-driven strategies, the country can pave the way for sustainable solutions and long-term growth in the energy industry.