The Nation Newspaper

Tag: Association of Nigerian Electricity Distributors (ANED)

  • Why NERC is unable to grow sector, by group

    The Nigerian Electricity Regulatory Commission (NERC) is unable to grow the power sector because of the commercial and technical problems in the supply value chain, a source at the Association of Nigerian Electricity Distributors (ANED) has said.

    The source, who preferred anonymity, said the sector has not been able to perform optimally because NERC has refused to resolve the fundamental problems plaguing it.

    In an interview with The Nation on phone, the source said the 11 power distribution companies (DisCos) are not getting the right value for the electricity they are distributing to consumers, adding that the issue is retarding growth.

    The source said: “Traditionally, the power distribution firms are supposed to distribute the quantum of electricity coming from their counterparts in the generation arm – the power generation companies GenCos) – to the final consumers at a price that is beneficial to them and the market.

    ‘’However, the reverse is the case as the tariffs are not commensurate with the price of electricity in the market. Imagine a situation where a buyer buys a product at N50 and sell it at 50kobo. Where is the profit for the buyer?

    The source said the DisCos would continue to grapple with liquidity problems until a review of the tariffs is done by NERC.

    The source accused NERC of being inactive when it was supposed to act. “As a matter of fact, a review of the tariffs is expected to take place every six months. However, there was nothing like that in the past six years. The Multi-Year-Tariff-Order (MYTO) is not being implemented in line with the Nigerian Power Sector Reforms Act. Therefore, how can the DisCos get the right price for the product they are supplying their customers?

    ‘’The sector is fundamentally unable to close the gap in the tariffs it is passes to the consumers. This, the source added, has resulted in the inability of the DisCos to meet their obligations by subsidising electricity.

    The source urged stakeholders to come together and address the problems, adding that the sector would not grow until this was done. He said the Federal Government had intervened by giving N750billion to the sector, which would not do much due to the plethora of problems besetting the sector.

    The source said the Nigerian Bulk Electricity Trading Company (NBET), Transmission Company of Nigeria (TCN), the GenCos and the DisCos had some problems, which ranged from paucity of funds to dilapidated infrastructure, among others.

    Another problem that is inhibiting the growth of the DisCos and the sector, according to the source, is poor exchange rates. He said the DisCos bought some equipment at N160 per dollar some years ago, but that this had gone up to N360 per dollar.

    ‘’This makes it difficult for the operators to get enough dollars to buy equipment for maintenance. These problems have become  constraints to revenue generation for Discos,’’ he added.

  • DisCos: Why we must speak for our $1.4b investments – ANED

    The Association of Nigerian Electricity Distributors (ANED) Wednesday told the Nigeria Electricity Regulatory Commission (NERC) that it has the legal backing to speak for the Electricity Distrubution Companies (DisCos) that invested $1.4 billion in the power assets.

    The association in its reaction to the communique that barred them from denigrating the Minister of Power, Works and Housing, Babatunde Fashola, noted that it speaks with the legal backing that the other associations in the sector rely on to air their views.

    Read Also:NERC bars DisCos from villifying Fashola

    In a statement by ANED Chief Executive Officer, Azu Obiaya Wednesday, the association said its activities are guaranteed by Section 40 of the 1999 Constitution of the Federal Republic of Nigeria under the right of association.

    It said, “The DisCos, with their formation of, and membership of ANED, are exercising this right, no different from similar entities along the Nigerian Electricity Supply Industry (NESI) value chain, such as the Association of Power Generating Companies (APGC), Nigerian Gas Association (NGA), National Union of Electricity Employees (NUEE) etc.”

    ANED said it represents the DisCos with a principal mandate of advocacy, to protect the interests of its member companies directly and, indirectly, the incomes of a 22,000-employee workforce.

    The statement state, “The investors who have sunk more than $1.4 billion in the acquisition and operations of the DisCos to date and our customers who seek to enjoy the benefits of the best practices that result from the interaction of our members under the ANED umbrella.”

    NERC had in a communique issued after a meeting with the DisCos on August 27, 2018 said ANED activities were discouraged and that the association should not interfere with policy directives or regulatory pronouncements made by the Minister of Power or the Commission.

    It also barred ANED from making any unwarranted remark against the minister and NERC Commissioners.

    ANED also said its expression or promotion of a viewpoint that is contrary to that of an established regulation or policy should not be construed as ‘interference’, particularly, in the context of the workings of an industry with multiple stakeholder interests.

    The association said there was need to address the widening tariff gap that hinders DisCos from performing their obligations due to freezing of the residential tariffs (R2) in 2015, for 18 months, removal of Collection Losses in 2015; non-implementation of five tariff reviews.

    It also said N435.7 billion of under-recovered revenue, among others are the regulatory responsibilities NERC should focus on.

    ANED further reiterated it’s interested in the urgent reset of the sector, with the implementation of the Power Sector Reform Program (PSRP) to stop the sector from bleeding, drive the investment that is critical for injecting efficiency and provide electricity customers respite from the current difficulties of electricity supply.

  • Non-payment of electricity bills will worsen power supply – ANED

    Non-payment of electricity bills will worsen power supply – ANED

    The Association of Nigerian Electricity Distributors ( ANED ) has called on Nigerians to pay their electricity bills promptly.

    It said that non-payment of electricity bills would worsen the irregular power supply in Nigeria.

    Mr Sunday Oduntan, its Executive Director (Research and Advocacy), said in a statement in Lagos that lack of steady power supply had hindered the development of the country.

    ANED is an umbrella body of the 11 power distribution companies in Nigeria.

    “If the DISCOs are not paid, their businesses will suffer and if their businesses suffer, our hope for constant electricity will be a pipe dream,” he said.

    The association said it was from the monthly electricity bills paid by Nigerians that DISCOs have to pay the Nigerian Bulk Electricity Trader (NBET) for electricity supplies that they received.

    “NBET also pays the Generating Companies ( GENCO ) who have to pay their gas suppliers (Thermal).

    “DISCOs will pay the market operator which is Transmission Company of Nigeria ( TCN ) and other stakeholders for the various services that they provide.

    “Consequently, if Nigerians don’t pay their bills, it starves the entire electricity value chain of the funds needed in power.

    “Lack of funds leads to poor or no electricity supply, potential failure of the power sector and related mass unemployment and diminished prospects for national economic growth,” he said.

    Oduntan said that non-payment means that our aspiration for 24-7 power supply would continue to be just an aspiration.

    “Not paying bills by bypassing or stealing electricity means that it costs legitimate customers more to receive electricity supply.” he said.

    NAN

  • GE requests for sovereign guarantee for investment in DisCos

    GE requests for sovereign guarantee for investment in DisCos

    Management of General Electric (GE) has sought Sovereign Guarantee from Vice President Yemi Osibanjo as condition precedent for it to invest in the country’s Electricity Distribution Companies (DisCos).

    The request came on the heels of the meeting that the GE had with the DisCos in Abuja on Tuesday from which it was shocked at the dismal nature of the Nigeria’s power firms’ balance sheets.

    The Executive Director of Association of Nigerian Electricity Distributors (ANED) Barrister Sunday Oduntola broke this news in Electricity Policy Education Workshop: Energy Corespondents in Abuja Wednesday.

    The theme of the workshop was the “Challenges of the Nigerian Power Sector.”

    He said that   operators need much money for the sector to bridge the liquidity gap.

    The only way the GE can stake its money in the sector, according to Oduntola, is if the federal government can serve as a sovereign guarantee in case of any infraction.

    He said that “as at Tuesday we had a meeting with the team of people from the General Electric. The Head of General Electric had a meeting with ANED. He asked to see our balance sheets. He wanted to know how impressed the sector is. As soon as he saw the balance sheets, he said No! No! He said if the government can provide what is called sovereign guarantee, yes!”

    “In the case of the General Electric, it happened Tuesday. They wanted to know how the sector is doing in terms of doing business. So they are trying to see how they can come in. They have a lot of money to invest. They wanted to know the challenges like the issue of metering, network and others.”

    According to him, the meeting is an ongoing discussion because “they have the money and we need more foreign investors to come in.”

    Oduntola also noted that Nigeria was not conducive for investment even when the power sector was privatized as security of investment always means the sanity of contract.

    He said that the business environment in the country is so difficult to the extent that only two out of the 11 distribution companies can conveniently pay their workers’ salaries as when due.

    Arguing that the Discos have injected fund into their business since 2013, he said that they have installed a total of 612,552 meters.

    He insisted that the companies the major constraint to investment in the sector is lack of cost reflective tariff since there has been embargo on tariff increase since 2015.

    Oduntola recalled that part of the $1.4billion that the paid for the Power Holding Company of Nigeria (PHCN) assets was used to pay off the workers.

    The ANED spokesman commended the administration of President Muhammadu Buhari, which he said has been more faithful to the development of the power sector than the previous ones.

    He said the reason why some DisCos sometimes reject their load allocation, is when the Transmission Company of Nigeria (TCN) evacuates it where there are no equipment to cope with it.

    He added that the DisCos also reject load allocation when it is wheeled to location that is permeated with electricity theft, yet does not pay for power.

    “It is true that sometimes we reject load allocation. I have the right to tell you where I want my light,” he said.

    He condemned corrupt practices in the electricity market which he said are the handiwork of both staff of the companies and their customers.

    Confirming that the Federal Executive Council has approve the payment of N26billion as the verified Ministries, Departments and Agencies (MDAs) debt, he noted that the Minister of Power, Works and Housing, Babatunde Fashola directed that the money should be paid as part of the debt that the DisCos are owing Nigeria Electricity Bulk Trading Company (NBET).

    In other words, he said none of the distribution companies received the cash from the federal government.

  • DisCos promise to achieve metering soon

    DisCos promise to achieve metering soon

    • Say only MD customers are exempted from payment

    The Association of Nigerian Electricity Distributors (ANED) promised to achieve metering of their customers sooner than later.

    It reiterated that only Maximum Demand customers are exempted from payment of electricity bills in absence of meters.

    The association that is an umbrella body of the 11 electricity distribution companies (DisCos) yesterday made the clarification in a statement.

    The statement reads in part: “the Association of Nigerian Electricity Distributors (ANED) hereby provides clarification on the information contained in certain recent publications, on the notice issued by the Nigerian Electricity Regulatory Commission, (NERC) on the metering of Maximum Demand (MD) customers.

    “The publications have, erroneously, stated that the requirement of non-payment of electricity obligations, in the absence of the customer not being provided with a meter, applies to all electricity consumers.  This is incorrect. For clarity, this requirement only applies to, and is specific to MD customers and not residential customers.

    “For further clarity, MD customers are commercial and industrial customers who consume high levels of electricity and contribute substantially to the revenues of Distribution Companies (DisCos). The consumption threshold for MD customers is 45KVA.The MD meters are connected on the 11Kv (High tension wire) electricity lines, mostly on dedicated transformers. The customers include heavy users of electricity like commercial business plazas, large firms, and small-scale industries among others.”

    “We recognise that significant interest in the NERC notice is directly linked to our customers’ requirement that they be metered. And rightly so. It is critically important that we state that there is no more interested party in the comprehensive metering of our electricity consumers than the DisCos.  And this is because we understand and fully appreciate the importance of the balance between electricity consumers tracking their consumption versus DisCos having a measure of electricity supplied to their customers, that metering brings. It is our hope and expectation that such metering will be achieved sooner rather than later.

    “While we continue to operate with the estimated billing methodology that is approved and mandated by NERC, we are working diligently towards addressing the metering obligations specified under our Performance Agreements with the Bureau for Public Enterprises (BPE), as well as ensuring that we continue to be sensitive and responsive to the inadvertent challenges of estimated billing that our residential or non-MD customers are faced with.

    “Again, please note that the NERC directive ONLY applies to MD customers and not residential customers. NERC has made the clarification as well, which is available on their website and publicised.”

  • DisCos promise to achieve metering soon

    DisCos promise to achieve metering soon

    …Say only MD customers are exempted from payment

     

    The Association of Nigerian Electricity Distributors (ANED) promised to achieve metering of their customers sooner than later. It stressed that only Maximum Demand customers are exempted from payment of electricity bills in absence of meters.

    The association that is an umbrella body of the 11 electricity distribution companies (DisCos) Wednesday made the clarification in a statement.

    The statement reads in part: “the Association of Nigerian Electricity Distributors (ANED) hereby provides clarification on the information contained in certain recent publications, on the notice issued by the Nigerian Electricity Regulatory Commission, (NERC) on the metering of Maximum Demand (MD) customers.

    “The publications have, erroneously, stated that the requirement of non-payment of electricity obligations, in the absence of the customer not being provided with a meter, applies to all electricity consumers.  This is incorrect. For clarity, this requirement only applies to, and is specific to MD customers and not residential customers.

    “For further clarity, MD customers are commercial and industrial customers who consume high levels of electricity and contribute substantially to the revenues of Distribution Companies (DisCos). The consumption threshold for MD customers is 45KVA.The MD meters are connected on the 11Kv (High tension wire) electricity lines, mostly on dedicated transformers. The customers include heavy users of electricity like commercial business plazas, large firms, and small-scale industries among others.”

    “We recognize that significant interest in the NERC notice is directly linked to our customers’ requirement that they be metered.  And rightly so.  It is critically important that we state that there is no more interested party in the comprehensive metering of our electricity consumers than the DisCos.  And this is because we understand and fully appreciate the importance of the balance between electricity consumers tracking their consumption versus DisCos having a measure of electricity supplied to their customers, that metering brings. It is our hope and expectation that such metering will be achieved sooner rather than later.

    “While we continue to operate with the estimated billing methodology that is approved and mandated by NERC, we are working diligently towards addressing the metering obligations specified under our Performance Agreements with the Bureau for Public Enterprises (BPE), as well as ensuring that we continue to be sensitive and responsive to the inadvertent challenges of estimated billing that our residential or non-MD customers are faced with.

    “Again, please note that the NERC directive ONLY applies to MD customers and not residential customers. NERC has made the clarification as well, which is available on their website and publicised.”

     

  • DisCos raise alarm over FG’s failure to provide N100b subsidy  

    Following federal government failure to provide N100 billion subsidy that was promised upon handover of the entities to investors on November 1, 2013, the 11 electricity Distribution Companies (DisCos) Monday raised the alarm over poor funding of the sector.

    In a statement issued by the Discos under the umbrella of Association of Nigerian Electricity Distributors (ANED) lamented over the poor funding for the transmission section of the sector, which they said has resulted in the huge load rejection cases.

    The statement issued by ANED’s Director of Advocacy and Research, Barrister Sunday Oduntan said government which holds 40 per cent equity in the utilities stated many interventions in the Performance Agreement of DisCos with the Bureau of Public Enterprises (BPE).

    “To date, the government has not met the privatization transaction foundational requirements of providing N100 billion in subsidies; payment of MDA electricity obligations; ensuring that the DisCos have debt free financial books; and implementing a cost reflective tariff,” it said.

    On transmission constraints, ANED doubted if the N50 billion appropriated for TCN in the 2016 budget was released by half adding that, “This funding level is even more pitiful when, especially, measured against TCN’s estimate of $7.5 billion for its five-year expansion plan that is expected to take us to 10,000 megawatt (mw), from our current 4,500mw.”

    The DisCos said they can only recover their costs when they have more energy delivered by the Transmission Company of Nigeria (TCN) in the area where they have customers.

    “Should the DisCos have to suffer financial losses due to the limitations associated with TCN’s wheeling constraints? They queried in the statement.

    ANED said TCN which is still a public utility “has remained underfunded over several decades.  Such limited or underfunding has resulted in poor transmission infrastructure and planning, with the consequences of grid instability and limited wheeling capacity, adversely impacting the distribution and generation of electricity.”

    They decried the continued dearth of TCN funding saying it impedes the DisCos’ ability to distribute power and has led to crashes in power turbines of Generation Companies (GenCos) due TCN consistent requests for de-loading.

  • Association expresses concern about FG’s N701bn Power Intervention Fund

    The Association of Nigerian Electricity Distributors (ANED) says the N701 billion Power Intervention Fund by the Federal Government has the potential to worsen revenue shortfalls bedeviling the power industry.

    The ANED Executive Director, Research and Advocacy, Mr Sunday Oduntan, said on Sunday in Lagos that the fund was a partial solution to the sector’s liquidity challenges.

    NAN reports that on March 2, the Minister of Power, Works and Housing, Mr Raji Fashola, announced that the Federal Government had approved N701 billion as “Power Assurance Guarantee” for the Nigerian Bulk Electricity Trading.

    According to the minister, this is to make payments to the Generating Companies (GENCOs) and gas suppliers for energy supplied and future supplies of gas and energy.

    Oduntan said, though, the fund was a welcome development, it, however, had the potential of exacerbating the revenue shortfalls that the market was suffering from.

    He said the fund would solve the N300bn energy supply liabilities, rehabilitate and replace faulty or old turbines and pay for the supply of gas.

    “As commendable as this intervention fund is, we believe that it is a partial solution to the liquidity challenges of the sector.

    “While an increase in electricity supply is everyone’s desired objective, such an increase without the requisite full recovery of costs via the appropriate pricing of power, means a resultant worsening of the market revenue gap,” the ANED director said.

    He said that he believed that the approved intervention was not expected to be a subsidy to the market but the proposed funding would eventually be recovered from the Electricity Distribution Companies (DISCOs) customers.

    According to Oduntan, funding the transmission network is imperative for the Federal Government’s proposed intervention to work.

    “The Transmission Company of Nigeria (TCN) needs to have the required capacity to wheel the additional power being generated for such recovery to occur,

    “Increased generation without commensurate wheeling capacity arising from a stable and robust transmission grid will result in stranded capacity and significant lost revenues.

    “From the little details made available to us, the historical shortfall does not seem to have been addressed within this initiative.

    “This is imperative as the DISCOs need to be able to make the necessary investments in network upgrades, improved customer service, billing and collections, metering, all of which have been major issues in the industry.

    “Such investments will not happen unless the DISCOs make the projected annual revenue requirements, which enables access to finance for the required capital expenditure (Capex).

    “Access to such financing is predicated on appropriate pricing of the retail tariff.

    “The growing working capital debt on the DISCO’s books less any amount to be paid under the intervention, will also continue to impede DISCOs’ ability to fund retail distribution from Capex requirements,’’ he said.

    The ANED chief said it was essential to use this period to appropriately allocate all the risks in the electricity value chain.

    He said this included the need to address the issues of access to foreign exchange and security of gas pipelines.

    Oduntan said that regulatory certainty and consistency continued to be the foundation for enabling and promoting the commercial conditions that would ensure a viable and sustainable Nigerian Electricity Supply Industry (NESI).

    He said that though ANED applauded the GENCOs/Gas Supplier-centred intervention, it believed that there was an urgent need for a holistic solution that comprehensively addressed the revenue requirements of the entire electricity value chain.

    “We believe the achievement of the stated objectives of providing confidence to investors for increased supply of electricity with the provision of this intervention will happen at the expense of limited electricity distribution,’’ Oduntan said.

     

  • Power operators grapple with N809b shortfall

    Power operators grapple with N809b shortfall

    …Urges FG to review N20b CAPEX cap
    The Electricity Distribution Companies under the auspices of Association of Nigerian Electricity Distributors (ANED) Thursday complained that the N809 billion current shortfall of the operators does not encourage liquidity.

    Addressing journalists in Abuja, the association’s Executive Director, Mr. Sunday Oduntan, said that “the figure of the shortfall now is N809.8 billion in the whole industry.”

    He described it “as the revenue that is accruable to the industry that is not there, stressing that the regulators in the sector are very inconsistent and perhaps inexperienced.

    He recalled that the Nigerian Electricity Regulatory Commission (NERC) fixed its tariff late December 2015, but scheduled that the tariff should be effective on February 4 this year.

    This delay, according to him, caused a loss of N12.8 billion across the power sector value chain.

    He urged Nigerians to ask the government to state how to tackle the liquidity issue that the sector is now grappling with by giving assurance on gas supply, and seeing to the possibility of selling to local consumers of gas in Naira.

    Continuing, Oduntan said: “When you sell to me in dollar and I receive my money in Naira, it cannot work. You should look how best to factor these things such that at the end of the day, this thing will work. Not only selling in dollar, they are not selling at the rate recognized by the tariff. N197 is the allowed Naira /dollar exchange in MYTO 2015. That means I am not allow to sell my electricity based on the tariff computed on the bases of N197/$. So any increase in dollar is nobody’s business but my burden to carry.”

    The Executive Director submitted that there is need for help for the sector for if the DisCos die, transmission would die and generation would also die.

    He added that “now the problem we have is that there is a lot of outstanding liabilities to be paid. We are owing NBET, we are owing market operators. We have been unable to pay… Shortfall does not encourage liquidity.”

    According to him, the operators cannot continue to run a system that does not allow the re-engineering of their balance sheet.

    He urged the government to make way for the recognition of shortfall in the electricity market.

    Oduntan called on the NERC to do the needful by making provision for a tariff that reflects the current reality in the market.

    According to him, since handover of the entities to private sectors several regulatory setbacks have hindered the DisCos from meeting their targets in the performance agreements.

    He called for an upward review of the N20 billion Capital Expenditure (CAPEX) limit that the Federal Government has allowed the companies, stressing that it has tied the hands of the investors and hindered them from expanding their businesses.

    The implication of that cap in the CAPEX, said Oduntun, “they (government) needs to cap it at some point as they want to avoid tariff shock. If it is very high tariff will be very high, if it is very low, tariff will be very low. But if you are looking at the reality in the market, while we are taking decisions on these things. Under the MYTO, I am only allowed to spend a certain amount; N20 billion and that money is not enough.”

    He also called on government that: “We must do everything that will make the DisCos balance sheets bankable. If it is not bankable no banks will lend you money.”