Legal Culture
The foregoing is quite apt in relation to the ongoing reforms and privatization in the Nigerian electric power sector. Lenders would, for example, be reluctant to give loans to sponsors of a power project where the cost profile shows an enormous potential of outstripping its revenues. It is also the case that, lenders looking to provide financing to the preferred bidders of PHCN’s Successor generation and distribution companies (the “Companies”) that were spun-off of the defunct Power Holding Company of Nigeria (formerly NEPA), which are currently being privatized are also concerned about the cost versus revenue profiles analysis.
There are, however, broader pertinent issues beyond costs and revenues which lenders need to take cognizance of, prior to providing loans for acquisition of interest in power companies or, indeed, the expansion or development of power related facilities or infrastructure.
