Featured, Power
By Anayo Ezugwu
THE Electricity Distribution Companies, Discos, has appealed to the National Assembly to intervene in the current liquidity crisis in the power sector. Sunday Oduntan, executive director, research and advocacy, Association of Nigerian Electricity Distributors, ANED, said the DISCOs would need N8.7 billion to comply with the remittance order set by the Nigeria Electricity Regulatory Commission, NERC.
Oduntan, who made the appeal in a statement in Abuja, said the breakdown of the required amount showed that the Discos would require a monthly amount of N725 million to meet the threshold of 35 percent remittance level set by NERC in the meantime. “To meet the new remittance expectations, Discos will have to finance an average gap of N725 million per month (estimated at N8.7 billion per year) until increased collections bridge the gap.
“The Discos were expected to do a minimum remittance of N12.69 billion, about 35 percent for the July, 2019 billing cycle from a total N35.79 billion, invoice from the Nigerian Bulk Electricity Trading, NBET, showed the Discos actually remitted N8.06 billion. The outstanding was N4.63 billion as eight Discos performed up to 23 percent of the 35 percent required of them for the month.
“The inability of the Discos to meet the 35 percent threshold specified by NERC is a direct result of the liquidity crisis in the power sector. The Average Technical Commercial and Collection, ATC&C, losses have remained high due to lack of liquidity, unattractive investment terrain and customer apathy to pay bills. A product of suspicion based on estimated billing and electricity theft,” he said.
According to Oduntan, the situation was further complicated by three years of delayed minor reviews and non-payment of electricity bills by Ministries, Departments and Agencies, MDAs.
He said over five decades of significant neglect of the sector, the massive investment that is required for the injection of efficiency that Nigerians desire continues to be undermined by inconsistent and uncertain policy.
He said regulatory changes and undelivered privatization commitments represented strong disincentives to investors. “The establishment of remittance threshold is good for Nigeria Electricity Supply Industry, NESI. However, realistic levels and timelines for Discos to ramp up are key to sustainable compliance.
“While the Discos said they await a cost reflective tariff from NERC, they, however, said it takes time to increase collection level. Compliance with NERC Order will impair this critical obligation to Discos staff, which will create labour unrest and reduce overall performance.”
Oduntan said compliance with the order would also lead to operational failure, compromising the Discos’ ability to distribute electricity to their customers. He recalled that there was such protest at Kaduna Disco recently by its staff for its inability to meet its salary and pension payment obligations.
He, however, appealed to the National Assembly Committee on Power to intervene so that the current intervention of N600 billion by the federal government in the sector goes beyond year 2020. “To cushion the effects of tariff hikes, allow investments to be injected by both Transmission Company of Nigeria, TCN, and Discos to mitigate shortfalls to the Generation Companies, Gencos, and gas suppliers,” he said.
Oduntan also requested that NERC amend the remittance order to ensure compliance. He also appealed that electricity debts owed by MDAs currently in excess of N100 billion be taken off or be discounted off the energy bills NBET provides to the Discos.
The executive director said this would minimise the difference between current Discos remittances and the NERC specified threshold. He added that the MDAs debts constituted a leakage from Discos remittances.
Realnews recalled that NERC had recently notified eight Discos that it would cancel their licenses within 60 days. This is due to defaults on its non-remittances of N27.7 billion energy invoice to the Nigeria Bulk Electricity Trading Company, NBET, for July billing cycle. The affected Discos include: Abuja, Ikeja, Benin, Enugu, Kaduna, Kano, Port-Harcourt and Yola.
– Oct. 25, 2019 @ 18:12 GMT |
Tags: Power Sector: Discos urges NASS to intervene in liquidity crisis
