Power: Discos owe service providers N183bn

Minister of Power, Works and Housing, Mr. Babatunde Fashola

The total debt of power distribution companies to service providers in Nigeria’s power sector has risen to N183.19bn.

A report presented by the sector’s Market Operator at the recent 26th sectoral meeting showed that the shortfall to service providers by the 11 Discos had been increasing since the commencement of the Transitional Electricity Market in 2015.

This is coming as the latest report on the disbursement status update of the Central Bank of Nigeria – Nigerian Electricity Management Stabilisation Facility revealed that the CBN had so far disbursed a total of N158.74bn to 37 power firms in the industry, out of 40 beneficiaries.

In the Market Operator’s February 2018 report, which is the most recent on the summary of invoices and payments by the Discos, the MO stated that the shortfall in remittances by power distributors to service providers increased from N177.21bn in January 2018 to N183.19bn in the succeeding month.

It stated that the debt had dragged on and had been on the increase since the declaration of TEM by the Federal Government.

The government had in 2014 announced the effective date for the commencement of all contractual obligations in the Nigerian electricity market as January 1, 2015, and stated that TEM would commence the same day.

It explained that the main focus of TEM would be the consummation of all contractual obligations as stipulated in the market rules, adding that the declaration was an attempt to make the market more mature and robust.

A further analysis of the report showed that none of the 11 power distributors owed less than N2bn to service providers since the commencement of TEM, as their combined invoice for service providers’ charges in February 2018 alone was N9.42bn, while the power distributors only remitted N3.44bn.

The shortfall for February 2018 was put at N5.98bn, while interest accruing from the Discos’ outstanding balance was N2.91bn.

On the release of funds to 37 power firms by the CBN, the report, which was also made available at the recently held 26th sectoral meeting, stated that following the maiden disbursement in February 2015, five batches of disbursement totalling N158.74bn out of N210.63bn (75 per cent of total facility amount) had been disbursed to date.

The report further stated that the latest disbursement of N38.53bn was made on April 4, 2018.

The CBN in collaboration with the Ministry of Petroleum Resources, Ministry of Power and the Nigerian Electricity Regulatory Commission signed a Memorandum of Understanding in November 2014 on the CBN-NEMSF programme to ensure improvement in the quantum of electricity being supplied by power firms across the country.

The fund, made available by the CBN in partnership with Deposit Money Banks in Nigeria, was intended at addressing shortfalls in power sector revenues caused by adjustments in electricity tariff basic gas debt and in the process reset the economics of the industry.

The report on the CBN-NEMSF disbursement outlines beneficiaries of the facility, which are seven power distributors, 18 generation companies, six service providers and six gas companies.

It stated that although 75 per cent of disbursement had been made, an outstanding of N51.9bn was yet to be disbursed.

The report showed that one challenges stalling further disbursement of the facility was that the full release of the NEMSF had not been achieved.

It stated, “Full disbursement of the NEMSF has not been achieved. This is despite the intention of the CBN to achieve set objectives of the fund by paying out money due to all beneficiaries within one year of commencement of the intervention. Kaduna and Yola Discos are yet to come on board the facility, both of which are expected to unlock N25.37bn into the Nigeria Electricity Supply Industry value chain.”

The CBN-NEMSF report, however, stated that both Kaduna and Yola Discos were making efforts to sign on to the facility by executing the NEMSF agreements as their participation was expected to be regularised before the end of second quarter of 2018.


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