DisCos And Blame Game In Nigeria’s Electricity Sector

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Many Nigerian have continued to  wonder what is the rationale behind the privatisation of the power sector if the purpose is not to ensure efficiency and improve electricity supply.

It is even believed in some quarters that the nation’s power supply situation has worsened since the sector was privatised in November 2013 resulting in some stakeholders demanding for the revocation of the licenses issued to the new operators.

To the ordinary Nigerian, the only benefit they have gained  from the privatisation program was the  increase in the tariff they pay even when they barely receive electricity supply.

The bundle of complains that abound in the sector include refusal of electricity suppliers now known as Distribution Companies (Discos) to provide meter to ensure the proper measuring of consumption to outrageous charges.

Across the length and breadth of the country, electricity consumers have expressed their grievances in various forms including staging peaceful rallies, vandalisation of electricity infrastructure and even instituting court cases against Discos for one form of neglect or the other.

A non-governmental organisation,  Enough is Enough (EIE) is currently collecting data to institute a law suit against the operators of Eko Electricity Distribution Company, Eko Disco and Ikeja Distribution Company (Ikeja Disco) over irregularities in their operations as it relate to consumers.

The Discos on their side are alleging that their inability to perform was due to lack of consumers’ corporation. Severally, they (Discos) have pointed out that consumers were not making payment for electricity supplies, with government agencies acclaimed to be the highest defaulters.

They also blamed stealing of electricity as well as vandalisation of their infrastructures for their poor performance.

Worst still, they (Discos) continue to ask for price hike in electricity tariff even in the face of consumers claims of paying for darkness. Thus, the blame game syndrome has continued.

Unfortunately, the blame game is not limited to the consumers and the Disco operators. The situation is not different with the relationship between other stakeholders in the electricity industry, as the generating companies, distributors, gas suppliers and even bulk distributors toe the same line of blaming the Discos for the failure experienced in the system.

These other stakeholders in the value chain in the Nigeria electricity supply industry (NESI), which comprises the Nigerian Bulk Electricity Trading Plc (NBET), Generation Companies (Gencos), and the Transmission Company of Nigeria (TCN) continue to see Discos as an enemy to the progress of the sector.

Those at the supply end, claim that Discos who were entrusted with interfacing with the consumers who provide the funds for operations are playing pranks.

Dr. (Mrs.) Joy Ogaji, executive secretary, Association of Power Generation Companies (GenCos) in a recent press statement said, “The poor remittance of market funds by the Discos has prevented the rest of the electricity value-chain from meeting up with their operations and also services their liabilities which include gas payments.”

To buttress this point, the Nigerian Bulk Electricity Trading Plc (NBET) has repeatedly published that the Distribution Companies (Discos) remitted only 30 per cent of their monthly energy invoices in 2016.

She added that the supply sector of the industry, can no longer perform required and scheduled maintenance as well as pay for gas supply, stressing that “the need to monitor the flow of market funds has become necessary as this will enable transparency in the market and also give the regulator the ability to identify issues that will progress the sector and act accordingly in advising the government and stakeholders where funds actually needs to be plunged into in order to bring about self-sustenance and competitiveness.”

Describing the electricity sector as a value-chain which needs to be remunerated as applicable covering the cost of generations, transmission and distribution,  Ogaji stated that the GenCos  were entitled to 60 per cent of market remittance.

According to her, the GenCos do not just generate power but also pay for gas supply and gas transportation. She explained that GenCos equally disburses 11 per cent of their income as transmission charge cost, while 25 per cent goes for distribution, and the balance 4 per cent is meant for regulatory charges and NBET.

She then emphasized that “the revenue referred to by the distribution companies are not their personal revenue but market funds to which they were made trustees to collect and remit.”

It may be agreed that the electricity industry in Nigeria is fast becoming a blame trading sector with the Discos standing alone and against the consumers and suppliers.

As part of efforts to resolve the crisis in the sector the executive managing director of the Market Operator (MO), an arm of the Transmission Company of Nigeria (TCN), Mr Moshood Saleeman, in October 2016, told our reporter at a market participants’ workshop in Abuja that if the poor collection and payment level continued, the Discos’ revenue accounts might be escrowed to guarantee more power generation.

Saleeman said although the Transitional Electricity Market (TEM) was not fully enforced, yet as the privatised firms were still growing.

“The signal we are giving is that if they don’t comply, we will be forced to enforce the penalties like security deposits and even escrow the accounts of DisCos concerned,” he stated.

Minister of power, works and housing, Mr Babatunda Fashola, was equally reported to have tongue-lashed the Discos, at the 15th monthly meeting of power sector stakeholders in Jos, Plateau State on Monday.

Fashola decried their continued inability to deliver on agreed terms and threatened sanctions against the firms again announced government’s consideration of escrowing the Disco’s accounts.

By implication the account would  be centralised and then allowed for all stakeholders to participate in the collection of revenue from the market place, thus, have a full knowledge of what is generated and as well ensure that it is distributed according to the laid down rules.

But, Discos are kicking against this move claiming that it amounts to nationalisation of their operations.

Director of research and advocacy, of the umbrella body of the 11 Discos, Association of Nigerian Electricity Distributors (ANED), Mr Sunday Oduntan, in a recent statement said, “Any attempt to centralise or escrow the Discos’ revenue accounts would be tantamount to nationalisation or expropriation of the Discos.”

According to him, the action “would also send very wrong signals to domestic and international investors that Nigeria is not fully open for private sector investment and that we are still partial to the old habits of nationalisation, preventing the injection of the cheap and sorely needed capital that is critical to the rehabilitation and improvement of electricity infrastructure.”

However, GenCos operators have a divergent view, according to Ogaji, the move would send positive and promising signals to potential investors as well as generation licensed investors, who are yet to commence construction of generation. She stated that the initiative would  prove to such investors that the current administration is ready to make the sector viable and sees power sector as its top priority and a strategic route to the newly-inaugurated economic recovery plan.

Speaking on the issue of raise by ANED as it concerns account centralisation, Ogaji said, “If centralising the payment system is tantamount to nationalising, the question that comes to mind is, what does selling the electricity and keeping the money all to oneself mean? If Discos claim they are not collecting enough, then they should open their books to make it plain for all to see and confirm their story. He who asserts must prove.”

Describing the move as one which would bring about transparency in the market and also the plans to declare eligible customers, Ogaji noted that it would bring about better performance in the electricity value chain which in turn would raise sustainable cash flow for all market participants and reduce tariffs due to competitiveness.

Source: Nigeria Today

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