There is a deepening financial crisis in Nigeria’s power sector, particularly affecting private companies like KEPCO Energy Resources and its subsidiary, Egbin Power.
The most affected companies are those that took large loans to buy into the sector during the 2013 privatisation. This financial crisis is part of a broader pattern that has emerged in the sector marked by cash shortages, poor returns, and legal battles.
A receiver/manager, Kunle Ogunba has been appointed by lenders to recover debts from KEPCO and Egbin Power. This action signals serious financial trouble, as it typically means the lenders don’t believe the companies can pay back their loans without intervention.
KEPCO and Egbin Power have disputed the receiver’s appointment and have taken the matter to court, indicating a legal battle is underway. This shows how contested and unstable the situation is.
Sector-Wide Cash Crisis
Nigeria’s power sector is facing a ₦2 trillion (about $1.3 billion) cash shortfall. This widespread liquidity issue is affecting many power companies, not just KEPCO.
Since privatisation in 2013, many firms borrowed money to acquire assets, including KEPCO. These loans are now unsustainable, and banks are focusing on debt recovery instead of new lending.
This development shakes investor confidence, especially in terms of upgrading infrastructure or investing in renewables. The question that is now being raised if private companies really succeed in Nigeria’s power sector without stronger government support?
