Power distribution companies are going to start paying interest on the debt they owe the electricity Market Operator since the commencement of the Transitional Electricity Market in January 2015, the Federal Government has declared.
It was gathered that the government, through the Nigeria Bulk Electricity Trading Company, had started adding up the interest on the over N120bn, which the Discos owe the MO since the past two years.
This is coming as the Discos have demanded that the Federal Government should allow them charge interest on unpaid electricity bills, because the NBET has started compiling interest to be paid by them on debt owed the MO.
On August 18, 2017, The PUNCH had exclusively reported that the indebtedness of the Discos to the MO, in terms of stipulated remittances to the MO, had risen to N120.7bn.
Sources at the NBET, however, stated that the debt had risen beyond the N120bn recorded in August, as many of the firms were still remitting below 40 per cent to the MO.
Our correspondent gathered that the shortfall in remittances by the 11 Discos to the MO had been accumulating since the commencement of the TEM in January 2015.
In a bid to stop the poor revenue remittance by the Discos, the NBET advised the firms to make complete payment for services rendered to them by other arms of the power market and stressed that it had started adding up the interest on the Discos’ debt to the MO since 2015.
The latest decision by the NBET was announced to stakeholders at the 20th power sector monthly meeting and was captured in the meeting’s minutes that were released to industry operators in preparation for the next gathering.
The minutes, which were obtained by our correspondent from the Federal Ministry of Power, Works and Housing in Abuja, read in part, “The NBET advised the Discos to make 100 per cent payment on services rendered as the NBET had already started the process of adding up interest on the amount owed to the MO since 2015.”
The MO, in its report at the meeting, stated that the Yola Disco made 100 per cent payment, while it received only 25 per cent payment from the Abuja and Kaduna Discos on August 15 and 28, 2017, respectively, “which was contrary to the claims made by them in the last meeting.”
The MO, therefore, informed participants at the event that plans were underway to sanction defaulting Discos.
On hearing that the Discos would start paying interest on the debt they owed the MO, a senior official of the Port Harcourt Disco appealed to the MO to step back from enforcing sanctions on the power distributors that failed to make 100 per cent payment.
An official of the Enugu Disco requested to know if it was possible to charge interest on unpaid electricity bills, and was supported by a representative of the Abuja Disco, who, according to the minutes, appealed that the firms be allowed to charge interest on debts owed by government ministries, departments and agencies following the NBET’s comments.
The interim Managing Director, Transmission Company of Nigeria, Usman Mohammed, explained that the MO arrived at the decision to sanction defaulters after it discovered that only the Eko and Yola Discos were making 100 per cent payment to the MO for services rendered.
He noted that the decision was taken in order to sustain the TCN, NERC and other service providers funded by the market.
The Minister of Power, Works and Housing, Babatunde Fashola, who chaired the meeting, advised the Discos to meter customers to avoid instances of delayed payments and not to charge any interest on amount owed.
The meeting also directed NERC to determine the MO’s sanction regarding 100 per cent payments for services rendered and delayed payments.
It also mandated the MO and NBET to synchronise their report on payments for services rendered in future presentations.
Meanwhile, NERC stated that it had done enough consultation with stakeholders to determine the fine on meter bypass.
The commission noted that the fines for defaulters using single and three-phase meters were N50,000 and N100,000 respectively, while that of maximum demand customers was three times their monthly electricity bills.
On October 3, 2017, The PUNCH had exclusively reported that electricity consumers who bypassed their meters would be forced by NERC to pay up to N450,000 as fine.
NERC at the time explained that financial sanctions ranging from N50,000 to N450,000 for meter bypass by power consumers had been drafted by it and endorsed by the 11 Discos operating in the country.
At the 20th power sector meeting, a senior management official of the Enugu Disco complained that energy theft, meter bypass, vandalism and poor attitude of customers towards payment of electricity bills were some of the major challenges affecting the reduction of average technical commercial and collection losses of the distribution firms.