The Performance of CEC Africa and in effect the CEC Group has been weighed down by challenges faced in Nigeria where the operating companies are domiciled. According to CEC Africa Head of corporate services Clara Mvula, in a security note availed to the Zambian Business Times – ZBT, the company has continued in a net loss position in the 2018 financial year.
Mvula stated that some of the challenges faced in the Nigerian Market included the non-cost reflective tariffs perpetuated by the failure of the Nigerian regulator to adjust tariffs to account for movements in pre-agreed economic and sector indicators as well as a mismatch between cost of energy increases and allowable tariffs by distribution companies resulting in a reduction of profit for distribution companies.
She stated that other challenges faced by the company were the partial implementation of the Power Sector Recovery Program during 2018 affected by focus on the parliamentary and presidential elections in February 2019; and the non-payment of electricity bills by government agencies, a significant component of the Abuja Electricity Distribution Company Plc (AEDC) customer profile.
However, revenue compared to the same period in 2017 is up 34% mainly due to higher generation in Nigeria and improvements in collection rates at AEDC. North South Power Company Limited, an associate company contributed a loss of K83 million, as a result of implementation of new accounting standards.
The Group loss for 2018 stands at K3,072million which showed a 3% decline on 2017 results, in Kwacha terms on account of the depreciation of the Kwacha, and net finance costs saw a saving of 54% mainly due to a payment made for the debt owed to the Market Operator in Nigeria.
UBA Nigeria has called its bank facility
Further, CEC Africa reported that it acquired its shares in Abuja Electricity Distribution Company Plc through its subsidiary KANN Utility Company Limited. The total amount paid for the 60% share acquisition was US$164million of which US$122million was provided by United Bank of Africa Plc (UBA) of Nigeria through a 7-year acquisition debt facility guaranteed by CEC Africa.
In 2016, UBA issued a default notice to KANN based on the failure to meet certain agreed ratios and covenants, and subsequently in November 2018 UBA called the loan. However, negotiations have continued between the parties to achieve a mutually acceptable solution.
North South Power Company Limited (NSP), an associate company, has expressed interest in purchasing a stake in Abuja Electricity Distribution Company Plc. Negotiations between NSP and UBA are progressing and successful completion of the transaction will result in the restructuring of the loan.
Expansion across Africa has proved to be a major challenge for most companies due to the entrenched Colonial interest that still abide todate. Most companies decide to stick to specific regions and markets such as Anglophone, Francophone etc as there seems to be a hidden hand that has led to these perceptions.
