FG Plans to Deduct MDAs’ Electricity Bills at Source

Fri, Nov 4, 2016
By publisher
3 MIN READ

BREAKING NEWS, Power

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The Nigerian government plans to pay off the debt its ministries, departments and agencies owe power distribution companies by making deductions from their various allocations at source

By Anayo Ezugwu  |  Nov 14, 2016 @ 01:00 GMT  |

AT last, the federal government is determined to settle the huge debts owed the electricity distribution companies, Discos, in the country by its ministries, departments and agencies, MDAs, with a view to paying them off once their statuses are ascertained. The federal government will now begin to deduct and pay the electricity bills of its MDAs at source.

The decision of the government to enforce the bills settlement process was contained in a communiqué issued at the end of the fourth quarter market participants workshop convened by the Market Operator, MO, department of the Transmission Company of Nigeria, TCN. The arrangement will help the Discos to get payments for electricity they supply to government’s MDAs directly from the government’s central accounting system once they are verified.

According to the communiqué, operators have also requested the Nigerian Electricity Regulatory Commission, NERC, to ensure that it accommodates credible and flexible tariff assumptions concerning factors such as inflation and foreign exchange fluctuations in its imminent tariff review.

The communiqué stated that the regulator should in this regard grow capacity to acquire its own data independently to facilitate information-based decision making for the management of the industry. Similarly, the operators requested that a review of the sector’s risks allocation be done to allow for a fair share of the risks.

They had initially indicated that risks in the market were unfairly apportioned, adding that such cases where the government fail to guarantee gas supplies to power generation companies are usually not captured fairly in tariff reviews. “Based on the current state of the electricity market, the Regulator is to ensure credible tariff assumptions and respected methodology that ensure appropriate risk allocation to market participants and the government,” the communiqué said.

On irrational market behaviours by market participants especially in contractual obligations, the participants agreed in the communiqué that: “NERC needs to implement a mechanism for rewarding performance and punishing indiscipline.”

They called on the MO, Nigerian Bulk Electricity Trading Plc, NBET, NERC and Bureau of Public Enterprises, BPE, to collaborate and ensure implementation of necessary supportive commercial arrangements to boost the financial liquidity of the market. The participants also tasked the NERC in the communiqué to come up with a mechanism for improving market remittance which the MO said has dropped to 30 percent from 58 percent that it was in the early parts 2016.

According to the electricity distribution companies, Discos, debts owed them by government MDAs which include the military barracks and other security formations as at June 2016 was N58 billion. The Nigerian Army is the single largest debtor to the Discos, having consumed without paying N38.75 billion worth of electricity overtime.

Also on the inglorious list is the Nigerian Airforce with N3.09 billion, Navy 3.3 billion, Police N4.66 billion, Customs 528.78 million, Prisons N895.6 million and Immigration N47.8 million. A further breakdown of the debt indicated that federal ministries and parastatals across the country owed the Discos N9.98 billion in unpaid electricity bills.

State governments also owed the Discos N16.21 billion while local government owed N1.16 billion. The record equally showed that of the 11 Discos, Abuja is owed N18.6 billion, Benin N5.9 billion, Eko N8.6 billion, Enugu N7.2 billion, Ibadan N6.8 billion and Ikeja N5.9 billion. Others such as Jos is owed N6.5 billion, while Kaduna, Kano, Port Harcourt and Yola Discos are owed N8.2 billion, N1.2 billion, N6.88 billion and N2.46 billion, respectively.

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