Power
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The Nigerian Electricity Regulatory Commission is to roll out new regulation that will enable consumers who purchase power assets to recover their money from the electricity distribution companies, DISCO. It also said that the DISCOs are yet to remit N14.16 billion to the federal government
| By Anayo Ezugwu | Nov. 3, 2014 @ 01:00 GMT |
THE Nigerian Electricity Regulatory Commission, NERC, has said that customers who finance the acquisition of power assets like transformers and electric poles may start getting back their money from the respective electricity distribution companies from December this year. According to the commission, a regulation that will mandate the Discos to refund the money to customers who invest in electricity distribution assets will be published by the end of November and its implementation will be enforced.
Eyo Ekpo, commissioner, market competition and rates, NERC, said it was wrong for consumers to purchase power assets without being refunded by the Discos. “Nobody in any civilised country should pay for the assets that serve that person. So, we now have this framework; we have consulted on it, gone through the necessary process, done the internal work and we have finally got all the comments. We are now working on analysing it and at the end of November, we should publish that regulation,” he said.
The commission had factored all capital costs of power assets into the electricity tariff paid by consumers, and as such, it was unjust for the Discos to pocket the funds invested in equipment that they never purchased. “It is common knowledge that people have been buying power assets but the problem with that is that even though you are helping yourself, you are giving an asset to a Disco on which it will now recover the cost of that asset and pocket it. Meanwhile, the Disco did not spend that capital cost. It will of course incur the cost of operating it and cost of depreciation, which is money set aside so that in the future you can buy the asset when it has worn out. But the capital cost, which is also part of the tariff, is not the Discos’ to recover. It should go to the person that paid for the asset.”
According to him: “because there is no framework previously, the Discos were just collecting all that money without accounting for it and without any clarity as to how those that paid should be refunded. This is not supposed to be so.”
The NERC has also said that the privatised electricity distribution companies in the country did not remit N14.16 billion to different government agencies as stipulated in the interim market rule between November 1, 2013 and July 31, 2014. The NERC said the 10 privatised Discos were indebted to the Nigerian Electricity Liability Management Company, the operator of the Nigerian electricity market, and the Federal Inland Revenue Service to the tune of N14.16 billion.
Consequently, the NERC, in separate letters to the respective Discos on October 8, 2014, directed the companies to pay up the debts to the agencies and provide evidences of remittances made to the agency. It said failure to comply with the resolution would attract a fine of N10,000 for every hour until the eventual payment of the debts.
An analysis of the debts showed that Abuja Electricity Distribution Company owed the highest amount at N5.56 billion. As a result, NERC directed the Abuja Disco to remit N4.44 billion to NELMCO; N753.24 million to the market operator/NELMCO; and N168.98 million to the FIRS. The Eko Disco was asked to remit a total of N2.1 billion. The firm was directed to transfer N612.59 million to NELMCO; N390 million to the market operator/NELMCO; and N1.1 billion to the FIRS.
The Port Harcourt Disco was directed to remit N1.33 billion. While N549.1 million will go to NELMCO; N265.67 million and N519.15 million are to be transferred to the market operator /NELMCO and the FIRS, respectively. The Yola Disco was mandated to remit N239.36 million. Of this sum, N120 million should be transferred to NELMCO; N57.1 million to the market operator/NELMCO; and N61.96 million to the FIRS.
The Benin Disco was mandated to transfer N665.33 million to NELMCO and N133.51 million to the FIRS, making a total of N798.84 million. The sum of N1.1 billion should be remitted by the Enugu Disco. The firm was asked to transfer N698.11 million to NELMCO; N168.58 million to the market operator; and N192.67 million to the FIRS.
The Kano Disco owed N954.94 million, while the total indebtedness of the Jos, Ibadan and Ikeja Discos were put at N583.55 million, N340.63 million and N1.35 billion, respectively. The report noted that although the Kaduna Disco was exempted from making remittance to NELMCO, the firm, which has yet to be privatised, must remit its outstanding Value Added Tax deductions of N357.61 million to the FIRS.
However, one striking issue raised in the report on the Kaduna Disco was the N17.8 million it spent on hosting, logistics and entertainment of members of the Senate Committee on Power during an oversight visit to the firm. “Given the level of revenue collection performance, we believe this expenditure was not appropriately incurred,” NERC said.
The report stated that the reference open book review of accounting/financial records of the Discos was conducted for the purpose of ascertaining compliance with the rules for the interim period, as amended April in 2014, and appropriateness of the expenditures embarked upon during the period under review.
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