Distribution Companies, DISCOs, owe Nigerian Bulk Electricity Trading Company, NBET, over N500 billion. This debt is said to be a very big concern to the Federal Government, as was expressed yesterday.
Mr. Babatunde Raji Fashola, the Minister of Works, Power and Housing, made this known while addressing newsmen on development in the power sector that DISCOs’ debt profile to NBET was on the increase, in spite of reports of crazy estimated billing of customers.
In his words: “As things stand, my office still receives daily reports by text, e-mails and letters of exorbitant bills by DISCOs to consumers without meters, but the remittance by DISCOs to NBET is not increasing. “NBET also owes the GENCOs N325.784 billion, which can be settled if NBET collects what the DISCOs are owing.”
Professor James Momoh, the chairman of Nigerian Electricity Regulatory Commission, NERC, have received a marching order to compel the DISCOs to ensure urgent, speedy supply and installation of meters, with a view to eliminating estimated billing and promoting efficient industry and market structures.
The minister also charged NERC to stop DISCOs from threatening private entrepreneurs from entering the market to supply consumers whom the DISCOs cannot supply and to license such persons subject to terms and conditions in order to “promote competition and private sector participation” and avoid a private monopoly of power.
Fashola also directed NERC to step in to ensure that DISCOs improve on their distribution equipment and capacity to take up available 2,000MW in order to optimize the use of the electrical resource produced by the GENCOs.
“I direct NERC to immediately act in this regard. Enforce the contract of DISCOs to supply meters and act to ensure the urgent speedy supply and installation of meters with a view to eliminating estimated billing and promote efficient industry and market structures”, he said
“Stop DISCOs from threatening private entrepreneurs from entering the market to supply consumers whom the DISCOs cannot supply and to license such persons subject to terms and conditions in order to ‘promote competition and private sector participation’ and avoid a private monopoly of power.”
O the purported moves by DISCOs to scare other private investors and monopolised electricity distribution, the minister cleared the air when he made it clear that NERC had not issued any exclusive license to either GENCOs or DISCOs to generate or distribute power.
“Unless expressly indicated in the licence, the grant of a license shall not hinder or restrict the grant of a license to another person for a like purpose and, in the absence of such an express indication, the licensee shall not claim any exclusivity, provided the commission may allow a licenced activity to be exclusive for all or part of the period of the licence for a specific purpose, for a geographical area, or for some combination of the foregoing.
“To the best of my knowledge, the commission, NERC, has not issued any exclusive license. If we take into consideration that after five years of privatization, there are still people and businesses who do not have power or enough power, common sense and public interest demand that we must not resist ordinary people, small businesses like shops and markets from seeking alternative sources of energy.
“The truth is that they already have these sources of alternative energy, in small petrol and diesel generators that cost them about N100 per kilowatt hour.
“If the DISCOs are not resisting the generator sellers who are contributing to pollution, what is the logic of resisting small entrepreneurs bringing mini gas plants to supply a market need?
“I am not unmindful of concerns about loss of market or customers by DISCOs but this must be balanced against our national interest and my belief that as their businesses steady and improve, they will be in a position to use their economies of scale of large volumes of power to buy out or out price these small entrepreneurs.
“For now, our developmental needs cannot wait for businessmen who are not yet ready to serve.
“National interest, public good, the need to support small business, provide access to power for ordinary people and increase productivity inform the policy statements 1, 2, and 3, that I have made above; and I expect NERC to act with dispatch.
“Let me implore members of the public who seek more information to get a copy of EPSRA and read its simple provisions.
“They confer extensive regulatory powers on NERC ( not on the Ministry or the Minister) including the power in Sections 73 and 74, to amend or cancel a licence if the licensee is unable it “…discharge the duties and obligations imposed by the licence.”
“In order in to promote stability, I also direct NBET the bulk trader, to work with Bureau of Public Enterprises (BPE), to fashion out ways to ensure that the DISCOs improve their collection remittance and also start to pay their debts.”
The Minister maintained that privatization was the way to go, even as he reviewed the five years activities of the power privatisation, especially under the last three of this administration, however, resolved that in spite of the challenges, power privatisation was the was the way out.
He said: “I suspect that these facts may appear like a red flag to the bulls of anti-privatization, but I remain convinced that privatization is the way forward.
“Privatisation has brought us better value in broadcasting, newspapers, telecoms, banking and other sectors and I remain convinced that it will deliver in power.
“The fact is that like in telecoms, banking, newspapers and other sectors, those who cannot compete will concede as some banks, and telecoms companies did without bringing down the sector.”
On ways to grow the power generation and distribution, in the power sector, the minister recalled: “As a facilitator of business and enabler of the private sector, Government has through the Central Bank of Nigeria, CBN, government has made available the sum of N213 Billion to the power sector at concessionary interest rate below market rate to GENCOS and DISCOS.
“Regrettably because of the source of funds, conditions such as the opening of Letters of Credit were attached to secure performance of the purpose for which the money was meant;
“Some DISCOS have not taken the money and instead have gone to court thereby frustrating full disbursement, and recently the NERC has revealed unauthorized use of the money by Ibadan DISCO and taken some regulatory actions
“Government has responded to claims of debts owed by MDAs to DISCOs before this administration alleged to be in the region of upwards of over N70 billion.
“At the cost of government, several hundreds of thousands of bills were very painstakingly verified and government ascertained that N27 billion was owed by federal MDAs to DISCOS.
“The payment was by a set-off of this amount against the sum of N859 billion owed by DISCOs to NBET (a government agency) to reduce that debt;
“Prior to the tenure of this administration and during it, GENCOS and gas suppliers who produce the power were being underpaid by NBET because DISCOs were under collecting or under remitting, such that GENCOs were getting only about 20% of their invoices for power they generated.
“Government created a N701 Billion Payment Assurance Guarantee for NBET to ensure that payments to GENCOS improved and this has now increased to 80% payment on invoices, up from 20%, in the hope that with improved power production, DISCOs will collect and remit more;
“Of course, it is important to point out that some other Government institutions are owing the DISCOs and there are individuals and corporations who are by-passing meters and stealing energy. All these point to a situation that can be resolved if everybody does what is right.”