Discos Pay for Paltry 24% of Electricity Allocation

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The Federal Ministry of Power has stated that the 11 electricity distribution companies in the country pay for only 24.9 per cent of the electricity allocated to them.

The Nigerian Bulk Electricity Trading Plc (NBET), better known as the Bulk Trader, collects the payment on behalf of the generation stakeholders, leaving a payment shortfall of 75.1 per cent.

In a communiqué issued by the ministry at the weekend, it said the N702 billion payment guarantee support to NBET by the federal government effective January 2017 would enable NBET to pay the generation companies, gas suppliers, banks and other partners, pending the improvement of remittances by the Discos to the 100 per cent target.

The communiqué noted that the money NBET collects monthly from the Discos was not enough to pay NBET’s contractual obligation to the Gencos.

According to the communiqué, in recent months the payment by the Discos to NBET was as low as17 per cent of NBET’s invoice.

“In January 2017, it was 24.9 per cent,the Gencos in turn do not pay their gas suppliers, equipment suppliers, banks and other partners what they are contractually bound to pay. The Discos also do not pay TCN what is contractually due to it for transmitting the energy the Discos sell to consumers. These resulting payment shortfalls and the accumulated debts are increasingly threatening the electricity supply system. They are also undermining the growth of the economy and the electricity sector by discouraging new investors from building new power stations and transmission facilities,” said the communique.

It added that the stakeholders would work with the Discos, to improve the Discos’ payment performance from its current 24.9 per cent level with 100 per cent payment as the target.

The communiqué argued that NBET was established to buy electricity in bulk from electricity generating companies licensed to produce electricity.

“The intention was that while the Discos take the time necessary to improve and expand their networks of substations and lines, enumerate and meter their customers, buy additional power directly from Gencos and provide better customer services, the existing and new Gencos could confidently make investments to expand generation with assurance that the bulk buyer would pay them for the electricity they deliver. Government retained ownership for the time being of the transmission system used to transmit the electricity from the Gencos to the Discos,” the communiqué added.

The communiqué noted that the Discos have not improved customer services at the pace government and the country expect.

“Some of the reasons for this failure are not the fault of the Discos alone – regulatory and tariff inconsistencies of the past Administration, unexpected changes in the foreign exchange market, and lower than expected generation due largely to pipeline vandalism for example, have challenged the Discos’ ability to perform. But much of the failure relates to their inadequate financial and technical capacity and some sharp practices of the Discos in their administration of collections from customers,” said the communique.

The power ministry added that subsequent interventions by the government would seek to strengthen financial transparency and discipline to ensure that all industry revenues are fairly distributed to all market participants and their suppliers according to contractual commitments.

The ministry said the government would also intervene to achieve and exceed the contracted and committed ATC&C loss targets and sustain aggregate collection efficiency above 60 per cent.

 

Source: BusinessNews

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