MTN Spends N660 Million On Diesel Monthly in Nigeria

Mergers, Acquisitions and Financial Results

South African mobile-phone company, MTN, said it spends $5.5million (about N660 million) on diesel fuel monthly in Nigeria. The whopping sum is spent on fuelling the company's 6,000 generators at its base stations across Nigeria. The generators supply power to the base stations for 19 hours daily.

MTN, now the largest mobile-phone provider in Nigeria, has to spend this huge sum of money to keep its generators running in view of the poor electricity supply situation in Nigeria.

According to Wale Goodluck, MTN Nigeria's manager for regulatory affairs, "we rely on generating plants as our primary source of power." He spoke in a report published by CNNMONEY.

Other investors and owners of small scale businesses in Nigeria are also reeling under the burden of huge cost of generating electricity to keep their businesses afloat.

"It wasn't always this bad. Nigeria used to have 79 power stations. When civilian rule was restored in 1999, only 15 were still functioning, generating just 1,500 megawatts of electricity," he said.

President Olusegun Obasanjo, had spent $8.5 billion repairing and building power stations, but the output has not increased significantly, he said. "Emmanuel Adewole, an economics professor at the Lagos State University, calls it "the most expensive darkness in the world," he added.

He added that, "The World Bank estimates that the country is losing about $600 million a year because of inadequate supply of electricity. Nigeria's new President, Umaru Yar'adua, has called the power situation "abysmal," saying it has stunted the country's economic growth, and he has pledged to make fixing it a priority of his administration.

"But the task is daunting. One problem: getting gas to the plants from the Niger Delta, where rebels regularly vandalize pipelines. Corruption also runs deep, and consumers, who see no need to pay their energy bills, owe billions of dollars to the state-owned Power Holding Company of Nigeria.

"Prepaid cards are increasingly being used, but in a country where everyone is an electrician, many have figured out how to bypass the meters. The government wants to privatize the company and is taking bids for power-generating plants from 400 local and foreign investors."

Daily Trust