Presidency, stakeholders weigh in on CBN’s escrowing of DisCos accounts

About two years after the escrowing of accounts belonging to 11 distribution companies (DisCos) by the Central Bank of Nigeria (CBN), stakeholders, yesterday, weighed options available to the country’s debt-laden power sector.

By escrowing, the accounts were locked, with cash allowed in and withdrawals by DisCos blocked. The accruing funds are thereafter allocated based on priority.

Under the original arrangement, loan repayment to the Federal Government was the priority followed by 100 per cent payment of market operators invoices, as well as invoices from the Nigerian Bulk Electricity Trading Company before others.

Fuelled by tariff shortfall, receivable collection, technical, commercial and collection losses, financial liquidity in the sector now hovers around N4t, affecting the balance sheet of commercial banks and reducing the sector’s attractiveness to needed investments.

It would be recalled that loans to the power sector from commercial banks stand at about N819.97b, by the third quarter of last year, as banks are already warning that the loans could increase in the cost of risk for these banks.