FG May not Invest in Power Distribution Through DisCos

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The Federal Government is undecided about routing electricity distribution investments through the power distributors operating in the country despite that it owns 40 per cent stake in each of the 11 distribution companies.
It, however, stated that it was interested in the well-being of the power distribution firms and urged the Discos to increase their capacities in order to effectively accommodate and distribute the load allocated to them by the Transmission Company of Nigeria.

The Discos have, on many occasions, stated that although the Federal Government had 40 per cent stake in each of the 11 distribution companies, it had never, for once, invested in any of the assets.

 Despite the concerns of the Discos, the Minister of Power, Works and Housing, Babatunde Fashola, declared that the government was undecided about channeling its investments in distribution assets through the Discos.

The minister’s statements were contained in the latest minutes of the meeting of the 20th power sector stakeholders’ conference, which was obtained by our correspondent in Abuja on Friday. Fashola chaired the meeting.

The minutes given to stakeholders in preparation for the next power sector meeting that comes up on Monday, read in part, “The Chairman (Fashola) stated that government had not yet taken any decision on routing investment in distribution infrastructure through the Discos.”

Fashola also told participants at the meeting that the Electricity Sector Power Reform Act did not envisage a monopoly for any licensee unless it was expressly stated in the licence.

He was, however, quick to state that the Federal Government was interested in the well-being of the Discos since it holds 40 per cent stake in the distribution companies in trust for state governments and workers.

He added that it must also ensure that the operations of the Discos were not against public interest.

The Discos recently claimed that the shortfall from the non-implementation of a cost-reflective tariff on quantum of electricity supplied to consumers had shot up to about N460bn.

They stated that this huge shortfall had made it tough for power distributors to efficiently invest in the electricity distribution networks, adding that it was important for the government to intervene in whatever form to salvage the situation.

The minutes further stated that Fashola directed operators in the distribution companies to comply with the order of the Nigeria Electricity Regulatory Commission, which reduced the timeline for making new connections in the sector from 145 days to 40 days.

He stated that Lagos, Ikeja, Kano and Kaduna Discos served as focal point firms to measure compliance with the order and its impact on Nigerian’s ease of doing business ranking.

The Permanent Secretary, Power, Luis Edozien, according to the minutes, informed the meeting that the government was working hard to increase the 33kV network evacuation capacity by 2,000 megawatts to align actual generation with generation capability and transmission capacity.

He reiterated the need for the Discos to increase their network capacity to utilise power from upcoming generating stations.

Edozien stated that the added 33kV infrastructure should prioritise customers’ willingness to pay for better services, adding that the investment requirements would be forwarded to Fashola by the next meeting.

The minister also appealed that more Discos should come on board to fast-track the roll out of network infrastructure at the level of the customers.

Source: IWIN

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