Following the huge arrears of electricity consumed by its Ministries, Departments and Agencies (MDAs), the federal government has said it will now begin to deduct and pay the electricity bills of its MDAs from source.
The decision of the government to enforce the bills settlement process was contained in a communique 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) in Abuja.
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 electricity distribution companies (Discos), debts owed them by government MDAs which include the military barracks and other security formations was N58 billion as at June 2016.
In this regard, the Minister of Power, Works and Housing, Mr. Babatunde Fashola said recently that the government would verify these debt figures and work out ways to pay them off.
The meeting had amongst several operational challenges of the country’s electricity market, highlighted the prevalent disregard for the market rules of the Transitional Electricity Market (TEM) by operators as the greatest challenge of the market.
It indicated that extant contracts signed by participants have been left unenforced, thus keeping the market from appropriately taking off.
According to the communique, 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 Regulator, the communique said 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,” said the communique.
On irrational market behaviours by market participants especially in contractual obligations, the participants agreed in the communique that: “NERC needs to implement a mechanism for rewarding performance and punishing indiscipline.”
They called on the Market Operator (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 communique to come up with a mechanism for improving market remittance which the MO said has dropped to 30 per cent from 58 per cent that it was in the early parts 2016.