Minister for Power, Works and Housing, Babatunde Fashola has challenged DISCOs to either deliver or risk been phased out as the terms of their licenses do not include exclusivity for license holders.
He made this known through a press release issued on Monday in Abuja.
The Electric Power Sector Reform Act (EPSRA) of 2005 led to the privatization of the Power sector which gave 6 Generation companies (GENCOs)the responsibilities of generating power, 11 distribution companies charged with supply of power, provision of meter to consumers while government retained power transmission through the Transmission Company of Nigeria (TCN).
” It is obvious to the ordinary person that supply of power is now a private business in the hands of the owners of the DISCOs.
But because of the critical and sensitive nature of power supply, Government has not left the supply of power supply solely to the DISCOs. Government at Federal, State and Local Government, and the former employees of the PHCN hold 40% of the shares of the DISCOs,” he said.
Fashola added, “Government is responsible for regulating behaviour and compliance through the Nigerian Electricity Regulatory Commission (NERC), which is like what the Central Bank (CBN) is to the banking sector.
Government, during the privatization, set up Nigerian Bulk Electricity Trading Company ( NBET) to support and enable private sector.
He further revealed that the (EPSRA) recognizes that NBET pays GENCOs for the power generated and vests them in the DISCOs to distribute for a commission under the vesting contract.
The minister reiterated that significant progress has been made in the power sector since the present administration assumed office.
” Generation of power has improved from 4,000 MW (approx) in 2015 to7,000 MW (approx) in 2018 averaging an increase of 1,000 MW (approx) per annum and we expect to add 455 MW (Azura); 215 megawatts (Kaduna), 240 MW (Afam III); 40 MW (Kashimbilla); almost a total of 954 MW in 2018; and 700 MW (Zubgeru) 480 MW (Okpai II) about 1,150 MW projected for 2019, and the GENCOs are undertaking various repairs, rehabilitation and expansion that will bring on incremental power.
Transmission has increased from5,000 MW (Approx) in 2015 to 7,124 MW (Approx) in December 2017 averaging 1,062 MW per annum increase in transmission capacity. TCN currently has about 90 Transmission projects in various stages of construction and many are to be completed this year.
So, we can transport what the GENCOS generate and there is a Transmission Expansion plan 2018 to 2028 which Government is committed to implement.
Distribution has increased from2,690 MW (Approx) in 2015 to 5,222 MW Approx in 2018, averaging an increase of 844 MW per annum because the DISCOS have also done some work.
But as it is now obvious, from 2016 when the DISCOs complained about lack of enough power to distribute, the problem today is that the DISCOs cannot distribute all of the Power that is available, leaving the sector with an unused capacity of 2,000 MW (Approx), with the approximately 1,150 MW projected to come this year and 2019.
This is not a time to trade blames, because there is enough to go round; rather it is a time to reiterate everybody’s responsibility and urge all of us to brace up, to do what we are obliged to do, which is to serve the people”, he added.
He reminded those that may fault government’s decision to privatize the sector of the value privatization has brought to the banking, telecoms, broadcasting and other sectors.
“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”, he stated.
He further revealed that government through the CBN
has made available the sum of N213 Billion to the power sector at concessionary interest rate below market rate to GENCOS and DISCOS as part of its efforts to create an enabling environment for private participation.
However some DISCOS have not taken the money because of thw conditions attached to secure performance for the purpose for which the money was provided and instead have gone to court thereby frustrating full disbursement.
He also disclosed that government has addressed claims of debts owed DISCOs by MDAs by past administration alleged to be in the region of upwards of over N70 Billion. It was ascertained that N27 billion was the true figure owed by federal MDAs to DISCOS after painstaking examination. The payment was thereafter set-off against the sum of N859 billion owed NBET by DISCOs to reduce the 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;
As things stands my office still receives daily reports by text, e-mails and letters of “exhorbitant” bills by Discos to consumers without meters, but the remittance by Discos to NBET is not increasing;
NBET is also owing the GENCOs N325.784 Billion which can be settled if NBET collects what the Discos are owing”, he said.
“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.
He said, ” In order to assist in the evacuation of 2000 MW ( the excess power not been distributed) the Government asked the DISCOs to submit their transformers and equipment requirements.
As 40% shareholder, Government has committed to invest N72 Billion for procurement of equipment and installation to help get the 2,000 MW to consumers and this process has been advertised with encouraging responses from original equipment manufacturers, which are being evaluated.
“In order to bridge the metering gap, Government has settled an inherited court case and is able to make available N37 billion to Meter Asset Providers (MAP) under regulations made by NERC to license meter entrepreneurs to help supply meters that the DISCOs are under contract to supply.
” In order to accelerate supply to industries and heavy users Section 27 of the EPSRA declared eligible customer, which was to enable people who consumed 2MW and above, who were not getting power because of lack of distribution equipment, invest in the provision of the equipment and take power directly from GENCOs who had the power. The DISCOs initially resisted and are currently giving reluctant co-operation to a policy meant to supply power to people they cannot supply.
All of you will remember of course that NERC, (not the Ministry of Power or the Minister ) , approved a Tariff increase for the Sector. When the public complained it was I, (not the Discos), who stood in the forefront of explaining to the public. Yet it is the Discos who collect the tariff”, Fashola stated.
” This is a picture of the industry as best as I can summarize the facts.
In the face of this picture, where we have power to sell, with more to come, the number of complaints coming to Government for meters, which the DISCOs should supply, and for estimated billings, and mass disconnections when not everybody is owing cannot continue.
“Government must act, and will do so. The DISCOs bought these assets with their eyes opened, and they must compete to deliver or exit.
Small businesses who need very little power are not getting enough because the DISCOs cannot take the power to them.
The investment of GENCOs is threatened because they cannot utilize the capacity they have installed.
In order to improve service to small businesses, Government, acting through the Rural Electrification Agency (REA) is linking Small Power Entrepreneurs with markets like Ariaria in Aba, Sabon Gari Market in Kano, and Sura Market in Lagos.
The markets contain approximately 37,000, 13,000, and 1,047 shops respectively, which are being metered by the small entrepreneurs who have offered to replace their generators with more efficient power and meters.
There are 15 (fifteen) markets in all which if successfully implemented would provide power to 85,485 shops, empower 205,000 SMEs and create 2,000 jobs during the installation and after in operation and maintenance.
The DISCOs are agitating that this should not happen , yet they offer no solution. I want to use this opportunity to refer to Section 71(6) of EPSRA, which I will discuss later and say clearly that the Law did not anticipate exclusivity for any DISCO.
Clearly, unless the DISCOs have a license that is endorsed as EXCLUSIVE, it is clear that no DISCO has exclusivity over its franchise area.
It is obvious that the law did not intend to replace Government monopoly of PHCN in the Power Sector, with a private monopoly of businessmen.
Whenever there is poor service, Government, as a matter of Policy and Public Interest is able and entitled to act and invite new players to fill the gap.
The truth is that the generator sellers, inverter sellers are already filling this gap without protest.
What these entrepreneurs therefore bring is, to replace multiple, inefficient, unhealthy and expensive generators with simple efficient and environment friendly solutions and meters.
This is what the public interest demands”.
He however echoed government’s commitment to see DISCOs compete favourably.
“It is not my intention, or that of Government, to take over the business of DISCOs. On the contrary, it is Government’s desire to see DISCOs thrive and flourish in a competitive environment.