The President, GreenElec, Mr Marcel Hochet, has advised the 11 power distribution companies (DisCos) not to depend on the N700billion loan, which the Federal Government granted the Nigerian Bulk Electricity Trading Company (NBET) to turn around the fortunes of the power sector but to create new investments.
He said the loan was given to NBET by the Federal Government to enable it pay for the power generated in the country.He said NBET purchases electricity from the generating companies (GenCos), which include the six power generation companies (GenCos), the National Integrated Power Plants (NIPPs), and the existing Independent Power Producers (IPPs).
He said NBET buys electricity from GenCos through Power Purchase Agreements (PPAs) and sell it to the distribution companies through Vesting Contracts.
Hochet said: “The DisCos will be banking on NBET to pay for electricity it bought from them and further get money for operation. That is where the DisCos would be shooting themselves in the foot. The reason is because the loan is short-term, implying that the government is providing a short term solution to the sector.What the DisCos need is a long-term solution, and not a short-term solution, which the government is offering the sector.”
According to him, the DisCos should invest in pre-paid meters in large scale and upgrade their billing system. Through this, they would make money to buy equipment that is vital to their operation.
‘’There are lot of transformers that are faulty and need to be replaced. Where would the DisCos get money to provide the transformers? Is it from the N700billion given to NBET by the government? No. The DisCos need to create new business to provide the equipment, among meeting other obligations to customers,” he added.
The Minster of Budget and National Planning, Senator Udoma Udo Udoma, last month, said about N700 billion was being provided to NBET as an off-taker to ensure that power generated was paid for.
Source: The Nation