By Emmanuel Addeh with Agency Report
The current dollar shortage in Nigeria may threaten the smooth operations of the Azura-Edo power plant as the company which provides a tenth of the country’s power needs struggles to meet its obligations to its creditors, the Financial Times reported yesterday.
The World Bank-backed power plant is reportedly at risk of a default on its loan payments because of a severe dollar shortage in Nigeria, the continent’s biggest economy,
The $900 million independent power plant located in Edo State has been unable to source dollars through the Central Bank of Nigeria (CBN), which has restricted access to the greenback in an effort to support the local naira currency, according to an industry executive.
“They have the funds (in naira) — they just can’t make the payment because they’re in the queue for dollars at the central bank, and they’re just aren’t enough,” the medium quoted the source, a financier, as saying.
But there are persistent fears that any default, even if only technical, would pose a setback for similar large projects in Nigeria, further squeezing foreign investment.
“If a project like this can’t get dollars then what are you really saying?” the Financial Times quoted the source to have said.
The dollar shortage has been driven by a precipitous fall in the price of oil, which provides 90 per cent of the country’s foreign exchange, as well as a drop in remittances and an exodus of portfolio investors.
In a statement in response to questions about a potential default, the Managing Director of Azura Power West Africa, Mr. Edu Okeke, said that Nigeria has faced a “tsunami of challenges.”