The Nation Newspaper

Tag: DISCOS

  • Fed Govt saves N41b from DisCos debt claims

    Fed Govt saves N41b from DisCos debt claims

    The verification of the N67billion Ministries, Departments and Agencies (MDAs) debt claims, which the 11 electricity distribution companies (DisCos) submitted to the Advisory Power Team (ART) of the Office of the Vice President has saved the Federal Government N41,415,488,965.

    In its report dated June 2017, the team recommended that N25,994,511,035 be paid to the DisCos.

    Following the report, the N25,994,511 035 that is recommended for payment is to be disbursed among the 11 DisCos in the following order: Abuja-N9,097,417,554; Benin-N882,529,548; Eko-N4,586,160,565; Enugu-N1,954,128,336; Ibadan-N1,812,660,960; Ikeja-N1,271,816,300; Jos-N1,506,588,078; Kaduna-N1,228,151,006; Kano-N1,207735,452; Port-Harcourt-N1,697,887,485; and Yola-N649,435,751.

    Consequent upon the conclusion of the verification, the Minister of Power Works and Housing, Babatunde Fashola at the 18 Monthly Power Stakeholder meeting in Kumboso, Kano State, said the sector is awaiting the approval of payment to the beneficiaries.

    The document showed that the Ministry of Defence topped the debtors’ list owing 53 per cent of the outstanding claims. The Ministry of Transportation owes nine per cent of the amount, Ministry of Interior seven per cent and the Ministry of Education seven per cent.

    The Ministries with the highest numbers of invoices claimed are the Ministry of Interior, which has 37 per cent of the invoices but only seven per cent of the debt claimed value and the Ministry of Finance submitted 14 per cent of the invoices but only owes two per cent of the debt claim, according to the report.

    It would be recalled that the demand for the payment of the claims had sparked fire in the sector as the DisCos under the aegis of Association of Nigeria Electricity Distributors (ANED) regularly placed newspapers adverts of how the debts have crippled their investments.

    On the other hand, Fashola insisted on the verification of the debt before payment could be made to the companies even as the power firms were reluctant to submit their claims to the ministry for verification.

    Meanwhile, the Power Sector Recovery Programme (PSRP) policy action of the Federal Government, insisted on clearing the MDAs debts from 2015 to 2016.

    Working with the McKinsey for the detailed desktop analysis and Monotech engineering for Physical Verification analysis, the  ART conducted the verification exercise.

    The report said that the review began with a claim of N67.41billion from the DisCos but N19.768billion was deducted out of scope, N7.168billion was deducted from “flagged in reports,” N5.781billion was deducted from other adjustments, the team also deducted N6.428billion as addition post response from DisCos, secured N14.408billion from DisCos attestation, and the amount verified post desktop verification was N26.717billion.

    It deducted N152million in Abuja from special adjustments which covers streetlights and traffic lights, where the claim was more than the energy consumption.

    Upon a physical verification, the report noted that the team achieved a reduction of N56 million across the 11 DisCos.

    At the end, the team authenticated a N25,994,511,035 debt claim for the 11 DisCos.

    The report also recommended that adequate budgetary allocation must be put for electricity bill payments (estimated at N40billion per year, based on current tariff.

    It urged that army barracks nationwide should consider establishing solar hybrid independent power plants

    The report suggested that a central platform to view all MDAs customers be created.

    The objectives of the verification exercise were to “clarify the debt claims from each of Nigeria’s 11 DisCos) against the FGN MDAs for 2015 and 2016.

    “Validate these debt claims using both an analytical Desktop Verification and a field Physical Verification.

  • TCN secures donors’ $1.55b for grid expansion

    TCN secures donors’ $1.55b for grid expansion

    The Transmission Company of Nigeria (TCN) has secured $1.55billion from multilateral donors to revive some projects and expand the grid.

    Its Interim Managing Director, Usman Gur Mohammed made this known to reporters during the 18th Monthly Power Sector and Stakeholder meeting in Kumboso, Kano State.

    He noted that the intervention came from the World Bank, African Development Bank, Islamic Development Bank, European Union and Japan International Corporation Agency (JAICA).

    He said that “the strategy is that we have approached the multilateral donors and we have been able to raise some significant money. We have also resuscitated some project that has not been doing well, like the Abuja transmission project which is supposed to provide three sub- stations and provide another avenue for supply through Abuja from Lafia.

    “We have also resuscitated the JAICA project that has been on the drawing board for  a long some time now, those two projects, plus the projects is about 1.55 billion dollars   which is coming from the world bank , the African Development Bank the Islamic  Development Bank, JAICA itself, and the European union is also giving us a grant.”

    He recalled that when he assumed office he discovered that TCN capacity to wheel power is actually higher than the capacity that the distribution companies (DisCos).

    According to him, there was need for grid expansion and cash paucity, which made it expedient that the TCN had to seek the support of the Federal Ministry of Finance and Ministry of Power to raise money from donor agencies.

    He revealed that “we have a stranded  load  generation  of  about 2,000 megawatts, this is not healthy  for the development of the sector, as time goes on if  we can’t pick those  generation it means that we are going to kill investment in the generation section.

    “On growing the load and avoid load rejection, we are working with Discos to see how to improve their capacity and we have appointed, Interface focal officers to help the DiSCos pick more load.”

    He noted that the company last week advertised transformer capacity for Kano, Kaduna, Lagos and Shiroro region.

    He said that TCN is now working towards realizing 20,000 megawatts of transmission capacity in the next few years.

    The Interim Managing Director pointed out that right of way has become a crucial challenge in the power sector which has resulted in a study by the West African Power Pool on the line from the Birnin- kebbi boarder of Nigeria from.

    He pointed out that since the payment of compensation for right of ways Nigeria has become a crucial problem, the TCN has started collaborating with State governments.

    Continuing, he said that : “We are collaborating with states in every areas that we  are  putting  a significant transmission capacity.  We are working to expand  the lines from Shiroro  to Kaduna, and from Kaduna to Kano, and we are putting a code line that will carry 2,400MW capacity, we have never had  that kind of line in Nigeria.

    “But we need to collaborate with sates and we have stated with Kaduna, the governor of Kaduna  is the one that is even paying the compensation  for some of the places where we are putting  sub –stations in Kaduna.”

    The Governor of Kano State, according to him, is also supporting TCN on the right  of ways  between Kano and Kaduna border.

    The company, he added, is also working with the governors of Abia,  Lagos,  Imo and Ogun states to enhance transmission capacity .

  • DisCos lose metering monopoly

    DisCos lose metering monopoly

    •States can produce power

    Minister of Power, Works and Housing Babatunde Fashola yesterday said there was nothing in the Electricity Power Sector Reform Act that gave electricity distribution companies (DisCos) the exclusivity of metering.

    He said the Federal Government had commenced the disbursement of the N701 billion electricity intervention fund to beneficiaries, adding that the Federal Executive Council (FEC) approved the release of N31billion to DisCos for metering.

    The minister spoke at the 18th Monthly Power Sector and Stakeholder meeting in Kumboso, Kano State.

    Fashola said: “Another action which took place is the FEC approval of the component that frees the Federal Government of the judgement debt of N119billion and also releases N39billion towards the supply of meters to DisCos.

    ”While it is true that DisCos have the obligation to meter customers, the law does not vest the monopoly of meter supply to the DisCos.

    “Anybody who qualifies under the safety regulation by NEMSA and under the licenses issued by Nigerian Electricity Regulatory Commission (NERC) can supply meters to customers under conditions by law. In other words, meter supply is an opene but regulated business.

    “You need the license from NERC to undertake it;  you need to comply with testing and safety standards of NEMSA to produce, install or import the meters but it is not a monopoly for DisCos alone.”

    He also said he had received inquiries whether state governments could produce their own power.

    “Nothing in Electric Sector Power Reform Act that stops any state from doing so,” he said, adding that all they need is to get the right license from the  NERC.

    Fashola also said even the generation companies (GenCos) could apply to NERC to build their own distribution assets that DisCos cannot fund. He pledged his support for any state that intends to play in any of the power sector value chain.

    “The mini grids are also consistent with our policy of incremental power to provide access to communities that have not been served or those who are under served.

    “Within the DisCos license, a new license can be granted by NERC because no monopoly was intended by the law unless it is exclusively stated in the license. I have gone through the law and I have not seen any exclusivity granted to anybody,” he said.

    Fashola who had earlier lauded the regulations of the NERC for establishing a mini grid, added that “if you are doing less than 100kw, you don’t need a permit but you need to be registered to know that you are there.”

    According to him, three states have already obtained licenses for mini grid development from the commission and the sector expects to receive more.

    The minister also commission a 15MVA transmission injection sub-station in Dakata, Kano to stabilize power to over 100 industries and over 10,000 residents in the area.

    On power sector performance, Fashola said there is now improvement in the generation of power over the recent past owing to the increase in gas to power.

    He attributed the rise to the relative peace that has been achieved in the Niger Delta and increase in rainfalls.

    “Therefore as from August 10, 2017, our peak availability of power which can be put on the grid was 6,863mega watts (MW), while the transmission capacity has risen in simulation to 6700Mw. Unfortunately, we cannot put all of that power on the grid because the DisCos cannot take it all,” he said.

    Fashola said DisCos cannot take all the power because of their ageing assets, limit to credit facilities and foreign exchange.

     

  • Metering of customers not exclusive right of DisCos – Fashola

    Metering of customers not exclusive right of DisCos – Fashola

    The Minister of Power, Works and Housing, Babatunde Fashola (SAN), said on Monday nothing in the Electricity Power Sector Reform Act gives electricity distribution companies (DisCos) the exclusivity of metering in the sector.

    He said the Federal Government has commenced the disbursement of N701 billion electricity intervention funds to beneficiaries.

    According to him, the Federal Executive Council (FEC) has approved the release of N31 billion to Discos for metering in the power sector.

    He spoke at the 18th Monthly Power Sector and Stakeholders’ meeting in Kumboso, Kano State.

    The minister said: “Another action which took place is the FEC approval of the component that frozen the federal government of the judgement debt of N119billion and also released N39billion towards the supply of meters to DisCos.

    Stressing that nothing hinders other investors from metering electricity consumers, Fashola said “while it is true that Discos have the obligation to meter customers, the law does not vest the monopoly of meter supply to the DisCos.

    “Anybody who qualifies under the safety regulation by NEMSA and under the licenses issued by NERC can supply meters to customers under conditions approved by law. In other words, meter supply is an open but regulated business.

    “You need the license from NERC to undertake it.  You need to comply with testing and safety standards of NEMSA to produce, install or import the meters. But it is not a monopoly for Discos alone.”

    The minister said he has received inquiries on whether state governments could produce their own power.

    “Nothing in the Electric Sector Power Reform Act stops any state from doing so. What they need is to get the right license from the Nigerian Electricity Regulatory Commission (NERC),” he added.

  • DisCos, EFCC partner to fight corruption

    DisCos, EFCC partner to fight corruption

    The Association of Nigerian Electricity Distributors (ANED), the Economic and Financial Crimes Commission (EFFC), the Police and other security agencies, are collaborating to rid the power sector of corrupt officials, it was learnt.

    ANED’s Executive Director, Research and Advocacy, Mr. Sunday Oduntan, said the deal had reached an advanced stage, adding that many workers had been investigated for bribery, stealing and extortion of consumers. He said those  found guilty would be kicked out.

    Oduntan said: “Some workers  of the Ibadan Electricity Distribution Company(IBEDC) and other power distribution companies who were found  guilty of grievous offences, such as stealing of electricity facilities or money, have been handed over to EFFC for investigation. Also, they have been forced out of the system, by their employers.

    “Many of such people would follow suit very soon. The exercise is taking place across the country as part of efforts to sanitise the sector. We, at ANED, frown at such practices and have vowed to stop them, hence our decision to set up a team that is investigating criminal issues involving workers of the DisCos. The anti-graft agency complements our investigation by making it more effective and stronger.”

    According to him, ANED, the umbrella body of the 11 distribution companies, is on top of the game as it gets information on where such illegal activities take place and  follow it up.

    “If any member of the public is extorted by any of the officials of the DisCos, we would get necessary information on the officials involved, we would report him or her to the DisCo that has employed her. The DisCo, in turn, would carry out its own due diligence on the issue in order to find out whether the allegation levelled on such person(s) are founded or not. We work as a team as we do not leave any area untouched in our investigation,” he added.

    Oduntan said ANED had visited Abuja, Plateau State and other parts of the country to monitor the officials and get reports on their conducts.

    He said the issue of sanitising the sector must start in the house first before going outside.

    On debts, Oduntan said the Ministries, Departments and Agencies (MDAs) owe the utility huge debts, adding that failure of the MDAs to pay their debts have made the debts accumulate over the years, which poses a big problem to the sector.

    He explained that the inability of the firms to meet their obligations to customers by supplying them electricity regularly, meters, and other equipment, was as a result of the debts.

    The DisCos, he said, were lacking funds to operate, stressing that the issue is affecting their performance. This is coupled with the fact that the power generation is decreasing in the country.

    According to him, if the power generation companies (GenCos) generate enough electricity for the DisCos, the DisCos still need to get funds to procure modern facilities. ‘’The DisCos need money to replace obsolete equipment with new ones in order to attain optimal delivery,’’ he said.

  • DisCos seek probe of NBET, GenCos for alleged fraud

    • Illiquidity in power sector hits N1trillion

    The Association of Nigerian Electricity Distributors (ANED) called on the Federal Government to probe the Nigerian Bulk Electricity Trading (NBET) Plc over inflation of invoices to Electricity Generation Companies (GenCos).

    Its Director of Research and Advocacy, Mr Sunday Oduntan at a briefing in Abuja, said NBET and power generators  have to open their books for scrutiny.

    He called for immediate intervention in the power sector to make it more sustainable, stressing that the process for raising monthly energy invoices be made transparent.

    “The GenCos (are) inflating invoices especially on capacity charges. I just heard  about this for the first time last week although, over time we have been wondering that perhaps there is a magic somewhere or that some magicians were doing magic somewhere under the table.

    ANED urged the Federal Government to compel a transparent audit of market accounts noting that  DisCos can’t continue to pay for GenCos’ investments when such costs cannot be passed to electricity customers.

    “If there is any kind of fraud, then it is time to address it. We have invoices to show for it and if we haven’t confirmed it, we won’t be talking about it.

     

  • DisCos need N220b for metering, says Fashola

    DisCos need N220b for metering, says Fashola

    •’Govt revisiting abandoned 2003 N37b meter contract’

    The 11 electricity distribution companies (DisCos) require   N220 billion for the metering of customers, Power, Works and Housing Minister, Mr. Babatunde Raji Fashola, has said.

    Fashola was the guest lecturer at this year’s edition of the public lecture series of the Department of Economics of the University of Lagos.

    He spoke on Power sector reforms: Challenges and the way forward.

    According to the minister, the Federal Government wants to improve power on sustainable basis. Through the Power Sector Reform Programme (PSRP), the government, he said, would achieve, among others, the metering of customers, and their appropriate billing.

    He noted that meters by the same manufacturers were calibrated for each DisCo’s use, such that you cannot use a meter calibrated for Ikeja DisCo in Eko DisCo without recalibration. Meters, the minister added, cannot be installed without a visit to the customer’s home for audit assessment,adding that DisCos liquidity problem makes it difficult for them to access credit to order meters.

    Fashola said: “One DisCo requires over N20billion to meter. The consumer base does not capture all those who consume power, and without meters, the DisCos aggregate power distributed to a destination and estimate of the bill is difficult.’’ Reinforcing the need for whistle blowing for energy theft as a civic responsibility, he said such reports would expose customers who don’t pay or steal energy.

    “Those who are resisting the installation of meters and assaulting DisCo workers who seek to install meters must stop it. It is a criminal offence. The government had in 2003, 14 years ago, issued a contract for the supply of three million meters to NEPA/PHCN estimated at N37 billion.

    “That contract was not performed until the privatisation was concluded in 2013, and was inherited by the Buhari government as a court case in which a judgment of N119 billion had been signed against government. We have worked to get the case out of court, negotiate the judgment and go back to the N37billion contract to see how many meters it can now provide, and how to install them. We are still finalising the terms of agreement,” he added

    On what the government is doing to improve supply, the minister said: “We recognise that our power supply is not enough and what we have done is do the simplest thing, get more power. So our road map seeks to get, first incremental power, progress to stable power, and then achieve uninterrupted power.

    “From this road map it must be clear to any right thinking and well meaning person that this is a journey and not an event that will happen overnight. As we progress on this journey, we will get to critical milestones from which we can look back and say we are now better off at that milestone, than when we started the journey.

    “I understand the urgency to get the power. I understand the high level of expectation. I know that they come from many years of broken promises and a change from government-managed power to privatisation of power.

    “While I fully support privatisation, I believe what took place in 2013 in the heat of politics was a privatisation that was well- intentioned since 2005 but delivered with some deception in 2013 with the expectation of political profit. It led many uninformed Nigerians to believe that once the privatisation was concluded, the assets sold to the distribution companies (DisCos) and the generation companies (GenCos) there was immediately going to be power.

    “I cautioned then that people’s expectations were being unduly raised without telling them that there was a lot of work to do. While I believed that the APC government will do a better job, little did I expect that I would inherit the problem. But I am grateful for the opportunity from Mr. President, to contribute to solving a problem that I am deeply passionate about and I will offer nothing but my best while I am at it.”

    Fashola noted that because of the  transition challenges, some people have called for the cancellation of the privatisation, but that such a cause of action had consequences.

    ‘’The government will be breaching its own contract in the same way we cancelled the privatisation of refineries in 2007 and will send a negative investment signal that we do not respect agreements, and government will have to refund in dollars, all the money paid by the DisCos and GenCos most of which have been spent on almost 50,000 workers of PHCN who had to be paid, among others.

    ‘’Instead of doing these, the government believes that the lapses in the privatisation can be re-engineered, retrofitted or reformed to deliver,’’ he added.

  • NERC to customers: get DisCos’ approval before buying transformers

    NERC to customers: get DisCos’ approval before buying transformers

    The Nigerian Electricity Regulatory Commission (NERC) has warned individuals and organisations against buying and installing transformers  without the approval of the power distribution company (DisCo) that supervises the community, its Head, Consumer Affairs Division, Hardley Jack, has said.

    Speaking at a stakeholders’ forum in Lagos, he said it was wrong for anybody to bypass the laws guiding the operation of the sector as contained in the Act for the privatisation of the power sector by the government.

    He said the sector may be facing problems such as metering, transformers, and other key components, but it did not give customers the right to do whatever they like.

    He said there are laws, which NERC, the Nigerian Bulk Electricity Bulk Trading Company (NBET), the power generation companies (GenCos), electricity distribution companies and other critical stakeholders in the value chain must comply with for the growth of the sector, adding that actions that are contrary to this, amount to disobedience.

    He said the DisCos can solve the metering problems as they affect them directly. He, however, said that gas, power generation and others should be jointly addressed by the stakeholders.

    He said the Commission is flooded with complaints from the customers, just as the DisCos are battling with the same complaints. According to him, DisCos and the customers need to work together to solve problems as partners.

    The Chairman, MEMCOL Nigeria Limited, Mr. Kola Balogun, said the issue of provision of meters can be addressed if stakeholders in the industry are committed to do so. He said the dependence on foreign meter producers by the power firms makes it difficult for many consumers to get meters.

  • DisCos require $7.7b to fix assets, says Nnaji

    DisCos require $7.7b to fix assets, says Nnaji

    • Urges govt to relinquish its 40% stake

    The 11 electricity distribution companies (DisCos) need to invest additional  $7.7billion to upgrade their assets to provide the services required of them,  the former Minister of Power, Prof Barth Nnaji, has said.

    Nnaji, also Chairman, Geometric Power Limited, said each investor would need at least $700 million, saying they require investment to the tune of seven times the cost of the purchase of the assets.

    The former minister, who was the keynote speaker at the Natural Gas Business Forum organised by the Nigerian Gas Association (NGA) in Lagos at the weekend, advised the Federal Government to surrender its 40 per cent equity holding in the DisCos, a measure he said, will make the power sector efficient.

    In his words: “I think the intention of the privatisation is to take the generation and distribution arms of the power sector out of government’s hands. But it is intended that those who have taken the assets should be able to invest in the assets, as the government on its part should have the will to ensure what it promised distribution companies will get done so that the distribution should hold them accountable to the agreement so made.

    “The agreement is that the government will give you these assets for a specific value, not a bided value but you should reduce losses – average technical, collection, and commercial losses, to a certain number that you bided for. But to do that requires a lot of cash to invest in the network, as well as the commercial aspect of the business, such as metering. If this is not being done, that’s a problem.

    “On the side of government, there must be a cost-reflective tariff in place. This means that the cost associated with the business is what is paid. The business of power is what government has to be sensitive about. Nigerians pay low value in comparison to other parts of Africa in terms of power. We have to decide as a country whether we want power or darkness.

    “But I say the cost of darkness is infinite while the cost of power is finite, and we should have the will to do something about cost-reflective tariff, otherwise, nobody will come here to invest and it’s not just mere talk’’.

    Nnaji warned that people will only come here to invest when there is cost-reflective tariff in place. “Cost-reflective tariff is what distribution companies want from government and hold on to, as a reason. After that the DisCos have to be held to deliver.”

    On the government’s 40 per cent stake in DisCos, Nnaji said: “The Federal Government should liquidate its position and very soon too. Government was supposed to use it (its stakes) to ensure that the distribution companies would perform, but in a case where you now have government people being on the board, board members will not be able to take decision you imagine will happen. It is not just correct for them to operate like that.  Government needs to quit along the line.’’

  • Judgment day for Discos

    Discos, the thumping, uproarious parties, are the last place for dire judgments — not with happy guys and merry gals “boogie-ing” down, with the rolling soft lights and music booming, from dusk till fade.

    Not so, these peculiar discos: Nigeria’s Electricity Distribution Companies, making merry and uproarious profits, from delivering darkness instead of light.  A Daniel just came to judgment!

    The Nigerian Electricity Regulatory Commission (NERC), industry regulators on June 7, read the riot act: any consumer not metered by March 1 should not pay any estimated bill — and the DISCO must not disconnect it.

    Though that directive for now affects corporate consumers (not households), it is a welcome noose on the neck of thieving DISCOs, which have devised every trick so far to thrive on billing for darkness, instead of billing for electricity.

    NERC explained that its decision on the MD (maximum demand) cadre of electricity consumers came after giving the DISCOs more than enough time to meter their clients but all to no avail.

    According to the NERC release on its website, the original deadline to meter every MD — nay, every consumer — was June 2016.  But DISCOs came with arguments to explain the near-impossibility to comply, not cogent efforts at meeting the metering target.  Not to worry, the deadline was shifted till 28 February 2017.  That meant by March 1, every MD must have been metered.

    But alas!  Even with that, it is the same old jeremiad of compliance impossibility.  Obviously sensing bad faith, NERC just wielded the big stick — nice!  Though there may well be teething problems with the power sector reforms, hinging business growth on phony bills is criminal and provocative; therefore should be decried.  Unfortunately, that would appear the joker of many of the DISCOs.

    Hardball welcomes this NERC move.  It is not only just, it is long overdue.  Still, the regulator must walk its talk.

    Many directives had been handed down in the past.  But the problem had always been enforcement.  NERC must ensure this one is vigorously enforced.  The market is too stressed to absorb further cost-push inflation, driven by rogue DISCOs, that would rather bill for darkness than for light.

    Not only that: NERC must ensure these DISCOs don’t pounce on the defenseless household segment of the market, as renewed target of their voodoo bills, now that the corporates are off-limits.

    On that score, however, the DISCO themselves would be well-advised against any rascality.  For one, the household market is much more volatile than the sedate MD segment.  For another, consumers appear much aware of their rights.

    Still, the ultimate would be extending the riot act to every segment of the market: if you don’t meter, you forfeit any logical and legitimate right — and method — to bill.  That is the only time the DISCOs would be deemed arrived, doing legitimate business.