Nexim

CBN escrow of DisCos’ bank accounts saved sector from collapse – Experts

a week ago | 125


Godwin Emefiele
NCC
ExxonMobil

ENERGY experts have claimed that the decision by the Central Bank of Nigeria (CBN) to escrow the bank accounts of electricity distribution companies in August, 2020, saved the power sector from collapse.

The apex bank decision restricted transactions on the bank accounts of the 11 utilities by allowing payments to flow in but blocked withdrawals by the DisCos.

With the Nigerian Electricity Supply Industry (NESI) said to be burdened by about N819.97 billion bank loans, escrowing the accounts made repayment of loans to the Federal Government (including the CBN) first priority, followed by 100 percent payment of market operator’s invoices and the invoices from the Nigerian Bulk Electricity Trading (NBET) Plc before others.

Speaking on the policy, former Managing Director of NBET, Mr. Rumundaka Wonodi pointed out that while it remained critical to ensure DisCos perform their operations, the account escrowing ensured transparency in the sector. 

According to him, “So far it has helped in increasing revenue in the sector. So many people have accused the DisCos of poor remittances, the initiative will make everything open. But it needs to be widened”.. 

On his part, former Chairman of Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi noted that the gains in the revenue may remain elusive if it doesn’t translate to improved operations of the DisCos.

“I don’t think it has significantly improved power supply to homes and businesses”, Amadi stated, stressing that the purpose of the escrow was to enable the CBN recover its fund so that it is not frittered away or used by the DisCos to finance their investment. 

According to him, “The CBN intervention is a special funding to deal with the liquidity crisis and legacy debt in the sector. It was supposed to be repaid but through a convenient process that will not adversely affect DisCos’ investment plans. The gains are two folds: whether CBN is getting repayment as and when due. I think through the escrow the CBN can guarantee itself repayment”.

On his part, Mr. Chijoke James, National President, Electricity Consumers Association, said while keeping the financial status of the sector healthy was important, improving quality of service to consumers was more critical.

He therefore urged the apex bank to ensure that investment on distribution infrastructure and meters for consumers was also given paid special attention.

“We want to see all consumers provided with electricity meters and an end to estimated billing system in Nigeria. We cannot continue to allow the distribution companies shortage consumers by issuing them bills for electricity they did not consume.

“We find this unacceptable and will continue to advocate against such unjust practice by the DisCos”, he added.

Latest industry data released by NERC had shown that electricity consumers across Nigeria paid N565.16 billion for energy in the first nine months of 2021.

The data showed that the amount collected by electricity distribution companies was 34.02 percent higher than the N372.92 billion collected over the same period in 2020.

Vanguard

- Jan. 13, 2021 @ 18:09 GMT |

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