CEC Africa, a subsidiary of the Zambia Energy Corporation Limited (ZECL), has posted losses after tax of over K3 billion during its financial year ending December 31, 2018, triggered by non-cost reflective tariffs sustained in its Nigerian market.
In a statement highlighting its financial results for the year ending December 31, 2018, CEC Africa, a ZECL majority-owned power utility, incurred huge losses of around K3.07 billion last year, up from K2.96 billion in 2017, mainly caused by non-cost reflective tariffs perpetuated by the energy regulator in the Nigerian market, among others.
However, the Group’s gross revenue marginally grew to K2.76 billion last year from K2.05 billion in 2017.
“Performance of the Group has been tempered by challenges faced in Nigeria where the operating companies are domiciled. These challenges included: non-cost reflective tariffs perpetuated by the failure of the regulator to adjust tariffs to account for movements in pre-agreed economic and sector indicators; mismatch between cost of energy increases and allowable tariffs by distribution companies resulting in a reduction of profit for distribution companies,” read a statement availed via sponsoring broker, Stockbrokers Zambia Limited.
The Group added that lack of payments for electricity bills by government agencies in that country also contributed to its financial challenges.
“Non-payment of electricity bills by government agencies, a significant component of the Abuja Electricity Distribution Company Plc (AEDC) customer profile; only partial implementation of the Power Sector Recovery Programme during 2018 affected by focus on the parliamentary and presidential elections in February, 2019,” stated CEC Africa.
“However, revenue compared to the same period in 2017 is up 34 per cent 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.”
ZECL hold a 52 per cent stake in CEC Africa Investments Limited, while ZCCM-IH and the LuSE have a 20 per cent and 26.89 shareholding each respectively, among others.
In 2013, CEC Plc established CEC Africa as an investment platform through which it could channel its investments in the power sector across sub-Saharan Africa.