The Electricity
Distribution Companies, DISCOs, has pleaded with the National Assembly to
intervene in the current liquidity crisis in the power sector, saying they will
need N8.7 billion to comply with the remittance order set by the Nigerian
Electricity Regulatory Commission, NERC.
The DISCOs, operating
under the aegis of Association of Nigerian Electricity Distributors, ANED, in a
breakdown of the required amount, said they will require a monthly amount of
N725 million to meet the threshold of 35 percent remittance level set by NERC
in the meantime.
A statement issued by
ANED’s Executive Director, Research and Advocacy, Barr. Sunday Oduntan, said to
meet the new remittance expectations, DISCOs will have to finance an average
gap of N725 million per month (estimated at N8.7 billion per year), until
increased collections bridge the gap. ANED said while the DISCOs were expected
to do a minimum remittance of N12.69bn (about 35%) for the July 2019 billing
cycle from a total N35.79bn invoice from the Nigerian Bulk Electricity Trading
Plc, NBET, the DISCPs actually remitted N8.06bn. According to it, “The
outstanding was N4.63bn as the DisCos group said the eight DisCos performed up
to 23% of the 35% required of them for the month.
The inability of the
DisCos to meet the 35% threshold specified by NERC is a direct result of the
liquidity crisis in the power sector.
“It said the Average Technical Commercial and
Collection (ATC&C) losses have remained high due to lack of liquidity,
unattractive investment terrain and customer apathy to pay bills – a product of
suspicion based on estimated billing and electricity theft. “A situation
further complicated by three years of delayed Minor Reviews and non-payment of
electricity bills by the Ministries, Departments and Agencies, MDAs.
“Additionally, with over five decades of significant neglect of the sector, the
massive investment that is required for the injection of efficiency that
Nigerians desire continues to be undermined by inconsistent and uncertain
policy and regulatory changes and undelivered privatisation commitments, the
aforementioned representing strong disincentives to investors. “The
establishment of remittance threshold is good for NESI.
However, realistic
levels and timelines for DISCOs to ramp up is key for sustainable
compliance.”While the DISCOs said they await a cost reflective tariff from
NERC, they however said it takes time increase collection level. Explaining the
implication of injecting N725m monthly to NERC’s expected remittance order,
ANED stressed further that, with the DISCOs’ required revenue, in terms of
operational and capital expenses already significantly far short of what is
required, that the amount represents DISCOss’ average monthly salaries.
Potentially, the
results would be a need for significant staff reduction and associated
operational failure, compromising the DISCOs’ ability to distribute electricity
to their customers.
ANED also requested
that NERC amend the Remittance Order to ensure compliance and that electricity
debts owed by MDAs, currently, in excess of N100 billion, be taken off or be
discounted off the energy bills NBET provides to the DISCOs, to minimize the
difference between current DISCOs remittances and the NERC specified
threshold.
The MDA debts
constitute a leakage from DISCO remittance. Vanguard Related 11 DISCOs’ debts
to NBET, MO hit N112bn in Q1’18 – NERC September 7, 2018 DISCOs monthly revenue
shortfalls rise to N25bn in 2016 January 24, 2017 No plan to increase
electricity tariff – Discos October 26, 2016
