DisCos urge NASS  to intervene in liquidity crisis in power sector 

DisCos urge NASS  to intervene in liquidity crisis in power sector 

Wednesday, October 23, 2019 10:14 pm

Electricity high tension cables

The Electricity Distribution Companies (DisCos), have appealed to the National Assembly to intervene in the current liquidity crisis in the power sector.

Mr Sunday Oduntan, the Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors (ANED) made the appeal in a statement in Abuja on Wednesday.

The News Agency of Nigeria (NAN) reports that the Nigeria Electricity Regulatory Commission (NERC) had recently notified eight DisCos that it would cancel their licences within 60 days.

This is due to defaults on its non-remittances of #27.7 billion energy invoice to the Nigeria Bulk Electricity Trading Company (NBET) for July billing cycle.

The  affected DisCos are Abuja, Ikeja, Benin , Enugu, Kaduna, Kano, Port-Harcourt and Yola.

Oduntan said that the DISCOs would be needing N8.7 billion to comply with the remittance order set by NERC.

According to him, the breakdown of the required amount shows that the DisCos will require a monthly amount of N725 million to meet the threshold of 35 per cent 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 per cent 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 billon

“The outstanding was N4.63 billion as eight DisCos performed up to 23 per cent of the 35 per cent required of them for the month.

“The inability of the DisCos to meet the 35 per cent  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.

He said that the situation was further complicated by three  years of delayed minor reviews and non-payment of electricity bills by Ministries, Departments and Agencies (MDAs).

According to him, 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 that regulatory changes and undelivered privatisation 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 is key for 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,” he said.

He said that compliance with the order would also lead to operational failure, compromising the DisCos’ ability to distribute electricity to their customers.

Oduntan recalled that there was such protest at Kaduna DisCo last week by its staff for its inability to meet its salary and pension payment obligations.

He , however, appealed to the 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 that 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. (NAN)

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