Concerns Over Plan to Centralise Discos’ Accounts Heighten

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Operators and stakeholders in Nigeria’s power sector are divided over plans by the Federal Government to escrow or centralise the revenue accounts of electricity distribution companies operating in Nigeria.

Although the Federal Government had yet to officially announce that it would escrow the accounts of power distributors, senior officials in various agencies under the Federal Ministry of Power, Works and Housing, as well as industry players among power distribution and generation companies have confirmed the plan.

In separate interviews  in Abuja, officials of the ministry and its agencies, Association of Nigerian Electricity Distributors as well as Association of Power Generation Companies, expressed divergent views about the development.

Also experts who spoke on the issue were divided about the plan. Some described it as unnecessary due to the fact that the Discos were run by private investors, while others said the move was right, considering the fact that the distribution companies had been performing poorly with respect to remittances to the Nigeria Electricity Supply Industry.

Power generation companies described the plan as one that would ensure transparency in the NESI. But the Discos kicked against the move, as they argued that it would amount to a nationalisation of electricity distribution companies by the Federal Government.

Nigeria has 11 electricity distribution companies and they urged that moves to escrow and centralise their revenue accounts over poor market performance with respect to their various monthly remittances to the Nigerian Bulk Electricity Trading Plc should be condemned and jettisoned.

The NBET had on several occasions published reports, as well as announced that the Discos remitted only about 30 per cent of their monthly energy invoices in 2016.

The Market Operator, an arm of the Transmission Company of Nigeria, also confirmed this after its Executive Managing Director, Mr. Moshood Suleiman, in October last year at a market participants’ workshop in Abuja, declared that if the poor revenue collection continued, the distribution companies’ revenue accounts might be escrowed.

Complaints of poor remittances by the Discos had continued since this year and the distribution companies blamed it on the unwillingness of power consumers to pay their electricity bills as required.

The Discos also blamed their inability to make the necessary remittances to the market on the low electricity tariff, which they claimed was not reflective enough and should be reviewed upwards.

They recently declared that information at their disposal was that the government wanted to centralise their accounts as a result of poor market performance.

They, however, argued that such move would mean a nationalisation of the 11 Discos privatised just three years ago.

Speaking on behalf of the Discos, the ANED’s Director of Research and Advocacy, Mr. Sunday Oduntan, said, “Any attempt to centralise or escrow the Discos’ revenue accounts will be tantamount to nationalisation or expropriation of the distribution companies.”

According to him, such action will be contrary to the objectives of the National Electricity Power Policy, 2001 and the Electric Power Sector Reform Act, 2005 of a private sector-owned and managed electricity sector.

“It will 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 the electricity infrastructure,” Oduntan said.

He said it would be improper to have a supposedly private sector-owned and managed business in which the government would seize control of its revenues.

ANED advised the Federal Government to avoid any consideration of regulations or action that would intrude into corporate responsibilities of procurement, financial management or personnel management.

“Relative to procurement, we are not aware that the Nigerian Communications Commission issues regulations to guide the internal procurement of the telecommunication companies, the Central Bank of Nigeria, banks; or the Department of Petroleum Resources, and oil companies,” Oduntan added.

Countering the position of the distribution companies, the Executive Secretary, APGC, the umbrella body of power generation companies, Dr. Joy Ogaji, condemned the Discos for not wanting their revenue accounts to be centralised.

Ogaji, who spoke on behalf of the Gencos, wondered why the Discos would be hiding their books and still coming out to claim that they were not collecting enough revenue from electricity consumers.

She argued that the money collected by the Discos from consumers was meant for all operators in the power sector, adding that it was unwise for the distribution companies to withhold the funds.

When contacted to comment on the matter, the Director, Emerald Energy Institute, University of Port Harcourt, Prof. Wumi Iledare, wondered why the government should plan to escrow the accounts of the distribution companies.

He noted that maybe the government wanted the power firms to start making investment for future purposes, which might be why it was planning to escrow their accounts.

Iledare, however, insisted that the power distribution companies were private businesses and that it would not be right for the government to control the financial accounts of private investors.

A director at the power ministry, who spoke to our correspondent on condition of anonymity, however, stated that the plan was still being worked on by the government and that it would be made public after it had been perfected.

Source: Punch

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