The power distribution companies (Discos) are owing regulators and service providers a total of N205.51 billion being payment obligations spanning the three year period from January 2015 to June this year.
This figures, which didn’t include the DisCos’ other indebtedness to power generation companies (GenCos), were given by the Market Operator (MO), an arm of the Transmission Company of Nigeria (TCN) at the just ended August 2018 power sector stakeholders’ meeting.
The service providers are the Nigerian Electricity Regulatory Commission (NERC), the Nigerian Bulk Electricity Trading Plc (NBET), the Transmission Service Provider (TSP), the System Operator (SO) and the Market Operator (MO).
During its presentation of its report at the meeting, the MO disclosed that the DISCOs’ indebtedness had been accumulating since the commencement of the Transitional Electricity Market in 2005 and the attendant the implementation of contractual obligations in the power sector.
According to the report, the 11 DisCos indebted to the service providers are Yola DisCo with N2.24 billion debt, while Abuja, Ibadan, Enugu, Kaduna and Port Harcourt DISCOs owe N26.48 billion, N22.64 billion, N21.95 billion, N19.31 billion and N19.14 billion, respectively.
The Managing Director, TCN, Usman Mohammed, accused the power distribution companies of withholding money meant for the expansion of the transmission network, adding that the poor remittances had made the TCN the most vulnerable component of the power value chain in the country.
The TCN boss pointed out that but for grants and loans from multilateral donors, the company would not have been able to expand the nation’s transmission network.
He clarified: “If you look at the power sector, the TCN is the most vulnerable organization. Why did I say that? I say that because the DisCos are collecting our money and they keep all they want to keep and give the sector whatever they like.
“Power generation companies are covered by what they call payment assurance from the Federal Government which is about N701 billion. The only arm of the sector that is not taken care of is the TCN and that is why we are the least paid in the industry.
“So, we had to go to multilateral donors like the World Bank to raise money for the expansion of the network. But you know you can’t use this money for operation. You cannot go to the World Bank and get money for running your system.
“The money you can get is for the expansion of your network, for hard investments. They can’t give you money for running your operations. So, this is the situation”, the TCN boss added
However, the DisCos’ spokesperson, Sunday Oduntan, identified the fundamental problem in the sector was the electricity tariff gap, pointing out that “between what the government has specified as the price of the electricity that we distribute or retail and the true cost of the product.
Oduntan explained: “It is this gap that has solely contributed to the excess of N1.3 trillion that the DISCOs are carrying on their financial books, an impediment to both the sustainability of the electricity market and the ability of the investors to meet their obligations.”
“Of important note is that we are not advocating or imposing a tariff increase on electricity consumers, some of whom are already dealing with affordability issues. We are stating that the mandated tariff gap is a responsibility of the government and should be addressed by the government, so that Nigerians can receive the improved electricity delivery service that they deserve”, he added.
