• Thursday, July 18, 2024
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UBA aims to sell Abuja DisCo before year’s end to recoup $122m debt

UBA aims to sell Abuja DisCo before year’s end to recoup $122m debt

United Bank for Africa says it hopes to sell Abuja Electricity distribution company, a delinquent electricity firm it took over two years ago to recover $122 million of debt.
In 2021, the lender foreclosed Abuja Electricity Distribution Co., which serves the country’s capital city and surrounding states, after it could not repay loans it raised to buy electricity assets from the Nigerian government following a 2013 privatization drive.

“We are at advanced stage of discussion towards disposal and we believe that in the course of this year that will be totally consummated and we will be done with the full realization of that asset,” Ugochukwu Nwaghodoh, executive director said at an investor call in Lagos.

At least six of the 11 electricity distribution firms operating in Africa’s largest economy are controlled by lenders and the Asset Management Corp. of Nigeria for failure to pay their debts.

Power firms in Nigeria have struggled to operate the assets they bought from the government due to under pricing of electricity by the industry regulator which approves tariffs, low revenue collection caused by inadequate metering and power theft.

That’s coupled by a dilapidated national grid that transmits just about a third of the 13,000 megawatts of electricity generated in Africa’s most-populous nation.

UBA plans to slow expanding its loan book this year to reduce the risk of higher loan losses as the West Africa nation faces inflation, which accelerated at the fastest pace in 18 years in February, and likely devaluation of the local currency,

Chief Executive Officer Oliver Alawuba, said at the same investor call. “We are looking at a market with a very high inflationary trend, with a depreciation, so a lot of risk coming in.”

The bank plans expanding lending by 12.5% this year compared with 21.4% in 2022 while ratio of non-performing loans to total credit will probably rise to 4% from 3.1%.

UBA exposure to Ghana bonds also cost it 17.3 billion naira in losses due to the debt restructuring in that country, according to filing to the Nigerian stock exchange.

Its net income rose 43% to 165.45 billion naira while net interest income increased 20% to 379.49 billion naira.