The indebtedness of power distribution companies to the Nigerian Bulk Electricity Trading Company has risen to N859bn.
As a result, the NBET has accumulated a total debt of N325.784bn, which is meant for the payment of power produced by electricity generation companies and supplied to the Discos.
The power distributors collect electricity bills directly from consumers, make payments to the NBET and the bulk trader in turn pays the generation companies.
The Minister of Power, Works and Housing, Babatunde Fashola, told journalists in Abuja on Monday that the Discos had persistently failed to meet their obligation in terms of remittances to the NBET, a development that had grown their indebtedness to N859bn.
Fashola said, “They (Discos) are content to allow the government’s bulk trader to pay the Gencos for the power and receive it under the vesting contract, which they are not properly performing, because they remit only about 15 to 20 per cent of funds for the power they receive, and have accumulated debts of about N859bn (principal and interest) owed to the NBET.”
The minister explained that the government, during the privatisation of the power sector, took steps to perform its support and enabling role to private sector by setting up the NBET
“What the NBET does is to give confidence to generation companies by guaranteeing to buy bulk power, which is an incentive to the Gencos to invest in building more power plants, because there is an assured buyer,” Fashola stated.
According to him, in real terms, the power that the Discos sell does not belong to them, as they are only distributors for a commission under a vesting contract with the NBET.
“All of these arrangements arise from the Electric Power Sector Reform Act of 2005, which led to the privatisation, which took place in 2013,” the minister added.
He stated that the EPSR Act, which regulates the power sector, recognised certain categories of persons who could buy power from a Genco, including the Discos, the NBET and eligible customers as declared by the minister under Section 27 of the Act.
“Interestingly, no Disco is buying power directly from the Gencos for reasons only known to them,” he said.
Fashola also stated that the EPSR Act did not make it mandatory for any Nigerian to receive power only from the Discos or to use only public power.
He, however, noted that from time to time, there could be failures in the system such as gas supply shortages or transmission failures.
“This is not the fault of the Discos, but any fair-minded observer will admit that this does not happen every day and this has nothing to do with the supply of meters or the proliferation of estimated bills,” the minister said.
On the NBET’s inability to pay the Gencos, he stated that this was solely due to the Discos’ poor remittances to the bulk trader.
Fashola said, “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 the NBET is not increasing.
“The NBET is also owing the Gencos N325.784bn, which can be settled if the NBET collects what the Discos are owing. Of course, it is important to point out that some other government institutions are owing the Discos and there are individuals and corporations that are by-passing meters and stealing energy.
“All these point to a situation that can be resolved if everybody does what is right.”