The imbalance in the foreign exchange (forex) market has hindered smooth operation by the nation’s power sector as dollar exchanged for about N470 at the parallel market, The Nation has learnt. Despite the implementation of the flexible exchange rate mechanism that allowed for sourcing of forex from multiple sources, operators in the sector are battling scarcity of dollars.
It was gathered that firms, on account of high exchange rates, are unable to repay the loans they took to buy the assets of the Power Holding Company of Nigeria (PHCN) in 2013. Also, it is difficult for the firms to get enough dollars to import meters, transformers, and other materials needed to meet their obligations to customers.
Industry sources said operators may be forced to further prune down the cost of operation if naira continues its free fall amid the recession in the economy, by downsizing the workforce and reducing output. The Group Leader Generation, Sahara Power Group, Micheal Uzoigwe, said the lopsidedness in the exchange rate was affecting activities in the industry. Read more