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Tag: DISCOS

  • Fed Govt to DisCos: nobody forced you to buy power assets

    Fed Govt to DisCos: nobody forced you to buy power assets

    POWER, Works & Housing Minister Babatunde Fashola was unsparing yesterday in Jos as he told the 11 DisCos to sit up.

    He said the Federal Government and Nigerians were fed up with excuses from the DisCos over their shortcomings and berated them for lack of “corporate governance” in their relationship with consumers.

    The minister told the DisCos to stick to the terms of their licences and implement their remittance obligations without complaints.

    Fashola spoke in the Plateau State capital during the monthly meeting of stakeholders in the power sector, hosted by the Jos Electricity Distribution Company (JEDC) at their NIPP Injection substation at Lamingo Dam.

    According to the minister, who chaired the 15th monthly meeting, “the monthly meeting is to provide opportunity for stakeholders to meet and brainstorm on challenges and ways to improve power supply to the satisfaction of all Nigerians.”

    He rejected the excuses of the DisCos and the various attempts by them to justify why they have not satisfied their consumers.

    Fashola told the DisCos: “What the public need to know and which your statement is silent about is that you are entitled to fully recover your cost and investment by law. And this is the function of how tariff are also calculated. So if you make your investment, the cost is passed through to consumers.

    “Therefore, if government holds 40 per cent of the shares of DisCos on behalf of the state and local governments and the Nigerian people, I believe that the government has the duty to ensure that you buy your parts and equipment at reasonable and competitive market prices and not through inflated contracts to relatives as we have seen in some DisCos in respect of which NEC will take a decision in due course and sanction those who are involved.

    “You also issued a statement regarding the declaration of eligible customers, your statement claimed that this provision which allows certain classes of consumers to deal directly with generation companies is premature and will result in extra cost to the consumers.

    “Your statement is however silent on the inability of some of your members to invest in feeders and distribution equipment to get the power to the consumers, this has led to the emergence of the terminology of ‘load rejection’ for an economy that does not have enough power and enough crude.

    “Your statement that money does not address the illogic standing in the ways of the consumers seeking to get by himself what the service providers or DisCos have failed or was unable to give him.

    “As for the alarm and the panic which your statement seeks to raise about the increase eligible customer declaration is not compulsory and applied to only those who were left to benefit from it.

    “And they are in the position, I believe, to decide whether the tariff of over N60 per kilowatt hour through generation by diesel which they currently use is preferable to investing in the distribution facilities that give them power at a lower term. What is important is that the law is followed; consultations are held with those prescribed before decisions are taken.

    “Rather than complain about old infrastructure, I wish to remind you that nobody forced you to buy these assets, and that you knew what you were buying when you bought them.

    “As for the N709 billion intervention, let me say that it is consistent with our government policy and determination to enable businesses flourish and it was intended to save the GenCos and the gas companies and their financiers who were providing service from collapse.

    “Your statement did not tell members of the public that these companies were not getting paid because you were not remitting all what you are supposed to be remitting to the market operators.”

     

  • ‘CBN’s N152b blocks DisCos access to funding’

    ‘CBN’s N152b blocks DisCos access to funding’

    The Association of Nigerian Electricity Distributors (ANED) yesterday lamented that N152.16billion Central Bank of Nigeria (CBN) fund reflecting on Distribution Companies (DisCos) accounts has blocked their access to funding from commercial banks.

    The fund is part of the N201.61 billion the apex bank earmarked for the sector.

    Its Director of Research and Advocacy, Barrister Sunday Oduntan in a statement, explained that the loan tagged, Nigeria Electricity Market Stabilisation Fund (NEMSF), was to pay for gas and other legacy debts incurred before private investors took over PHCN assets on November 1, 2013.

    According to him, the  breakdown showed that only N58.45billion (about 27.8 per cent) was designated for the DisCos while the balance of N152.16billion (72.3 per cent) was for the Generation Companies (GenCos), gas suppliers and other service providers. It would be payable in bits during a 10 year period by the beneficiaries.

    Oduntan said only N49 billion has been received by some DisCos out of the N120billion the CBN had disbursed since it commenced in 2015. He however lamented that although the N152billion balance was not for the DisCos, the financial books of the electricity retailers bear the debt burden.

    “The debt encumbrance is a significant impediment to the DisCos’ ability to borrow money to finance their capital investment, and their financing of the entire value chain,” Oduntan explained.

    On another N701.9billion the CBN assigned to Nigeria Bulk Electricity Trading Plc (NBET) to pay the GenCos from January to 2019, the group said if the retail end is not considered, the fund may not sustain the market.

    Oduntan said: “It is a good first step towards resolving the market liquidity challenge and ensuring that the upstream operators are not financially distressed, but it is not a complete solution to the problem.

    “As long as the retail end of the value chain continues to under-recover its cost, any possibility of the government recovering its intervention or fixing the ailments of the sector is an illusory one,” he noted.

  • You are not sincere, GenCos tell DisCos

    • Fed Govt’s debts to GenCos hit N500b

    The crisis in the Nigerian Electricity Supply Industry (NESI) got messier yesterday as the electricity generation companies (GenCos) accused the electricity distribution companies (DisCos) of being insincere with their account records..

    Whereas the DisCos had condemned the request from the  Nigeria Electricity Regulatory Commission (NERC) to open up their books, the GenCos under the auspices of Association of Power Generation Companies (APGC), described it “as not just a welcomed development, but also a wake-up call to all participants in the electricity market.”

    The APGC Executive Secretary, Dr. Joy Ogaji, who addressed reporters in Abuja yesterday, recalled that a fortnight ago the Association of Nigerian Electricity Distributors (ANED) likened the move to centralize their revenue accounts to nationalisation of the Discos.

    Ogaji expressed surprise that DisCos are churning out stories and “crying wolf” to gain consumers’ sympathy whereas the NERC enacted the tariff with their consent.

    She added that “there is something that Discos are not telling the people. What government is calling for is not just escrowing but visibility.”

    She however explained that the electricity sector is a value -chain that needs to be remunerated as  applicable covering the cost of generation, transmission and distribution .

    The GenCos, according to her, are entitled to “60 per cent of markets remittance as they not just generate power but also pay for gas supply and gas transportation. Transmission charge cost 11 per cent, distribution gets 25 per cent while the remaining four per cent is meant for regulatory charges and NBET.

    “The revenue referred to by the distribution companies are not their personal revenue but market funds to which they were made trustees to collect and remit.”

  • DisCos appeal to Fed Govt to release N100bn electricity subsidy

    The Association of Electricity Distribution Companies (ANED) has appealed to the Federal Government to provide the N100 billion subsidy it promised after private investors took over the power sector utilities on November 1, 2013.
    ANED, in a statement by its Executive Director, Sunny Oduntan, also appealed to the government to inject funds into the transmission section of the sector.
    It blamed the huge loss and rejection of electricity load on inadequate funding of the Transmission Company of Nigeria (TCN).
    According to the statement, the government which holds 40 per cent equity in the utilities, pledged to provide many interventions in the Performance Agreement between DisCos and the Bureau of Public Enterprises (BPE).
    It reads: “To date, the government has not met the privatisation transaction foundational requirements of providing N100 billion in subsidies, payment of MDA electricity obligations. It has not ensured that the DisCos have debt free financial books; and the implementation of a cost reflective tariff.”
    It said that the funding level of TCN was inadequate, given TCN’s estimate of $ 7.5 billion for its five-year expansion plan designed to increase its capacity to wheel 10,000 megawatt (mw), from the current 4,500mw.
    It said that the DisCos could only recoup their investments when they have more energy delivered by TCN in the area where they have customers.

  • 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.

  • Fed Govt, DISCOS clash over revenue accounts

    Electricity distribution companies (DISCOS) are kicking against the Federal Government’s plan to centralise their revenue accounts.
    The decision is being taken by the Federal Government because of the DISCOS’ poor monthly remittances.
    In a statement yesterday, the Association of Nigerian Electricity Distributors (ANED) said such a move amounts to the nationalisation of the DISCOS, which were franchised when the Federal Government unbundled the Power Holding Company of Nigeria (PHCN) Plc.
    The association recalled that the Nigerian Bulk Electricity Trading Plc (NBET) repeatedly published that the DISCOS remitted only 30 per cent of their monthly energy invoices in 2016.
    The Market Operator (MO), an arm of the Transmission Company of Nigeria (TCN), Mr. Moshood Saleeman, the Executive Managing Director, had in October last year, at a market participants’ workshop in Abuja, said if the poor collection continued, the DISCOS’ revenue accounts may be escrowed.
    But ANED’s Director of Research and Advocacy, Mr. Sunday Oduntan, who signed the statement, warned: “Any attempt to centralise or escrow the DISCOS’ revenue accounts would be tantamount to nationalisation or appropriation of the DisCos.”
    Oduntan said such action will negate the objectives of the National Electricity Power Policy, 2001 (NEPP) and the Electric Power Sector Reform Act, 2005 (EPSRA), of a private sector-owned and managed electricity sector.
    The statement reads: “It would also send very wrong signals to domestic and international investors that Nigeria is not fully open for private sector investment and that we are still partial to the old habits of nationalisation, preventing the injection of the cheap and sorely needed capital injection that is critical to the rehabilitation and improvement of electricity infrastructure.”
    Oduntan said it will be improper to have a, supposedly, private sector-owned and managed business having the government as the manager of its revenues.
    ANED advised the Federal Government to avoid any consideration of regulations or action that intrudes into corporate responsibilities of procurement, financial management or personnel management.
    “Relative to procurement, we are not aware that Nigerian Communications Commission (NCC) issues regulations to guide the internal procurements of the telecommunication companies; Central Bank of Nigeria (CBN), that of the banks; or the Department of Petroleum Resources (DPR), that of the oil companies”, the association said.
    The power investors also said they learnt that the government was planning to call for the declaration of eligible customers for the electricity market.
    Kicking against the move, Oduntan said that the minister can make such declaration only “when a competitive market exists in the Nigerian Electricity Supply Industry (NESI).”
    ANED said such competitive market, driven by efficiency, presence and utilisation of industry contracts does not exist now. It said the minister under Section 27 of the EPSRA 2005, has authority to determine “end-use customers’ who then constitutes eligible customers.
    The investors, however, said Section 28 of the Act requires that the DISCOS must be compensated for any reduction in their ability to “earn permitted rates of return on their assets” or any inadequacy in their revenues, as a result of such determination.
    They warned: “What this means is that, consumers will have to suffer an increase in their electricity tariff, to accommodate this premature declaration of eligible customers.”

  • DisCos: ‘Forget govt’s N700b power loan’

    The President, GreenElec, Mr Marcel Hochet, has advised the 11 power distribution companies (DisCos) not to depend on the N700billion loan, which the Federal Government granted the Nigerian Bulk Electricity Trading Company (NBET) to turn around the fortunes of the power sector but to create new investments.
    He said the loan was given to NBET by the Federal Government to enable it pay for the power generated in the country.
    He said NBET purchases electricity from the generating companies (GenCos), which include the six power generation companies (GenCos), the National Integrated Power Plants (NIPPs), and the existing Independent Power Producers (IPPs).
    He said NBET buys electricity from GenCos through Power Purchase Agreements (PPAs) and sell it to the distribution companies through Vesting Contracts.
    Hochet said: “The DisCos will be banking on NBET to pay for electricity it bought from them and further get money for operation. That is where the DisCos would be shooting themselves in the foot. The reason is because the loan is short-term, implying that the government is providing a short term solution to the sector.What the DisCos need is a long-term solution, and not a short-term solution, which the government is offering the sector.”
    According to him, the DisCos should invest in pre-paid meters in large scale and upgrade their billing system. Through this, they would make money to buy equipment that is vital to their operation.
    ‘’There are lot of transformers that are faulty and need to be replaced. Where would the DisCos get money to provide the transformers? Is it from the N700billion given to NBET by the government? No. The DisCos need to create new business to provide the equipment, among meeting other obligations to customers,” he added.
    The Minster of Budget and National Planning, Senator Udoma Udo Udoma, last month, said about N700 billion was being provided to NBET as an off-taker to ensure that power generated was paid for.

  • Fashola directs DisCos to meter customers, MDAs

    Fashola directs DisCos to meter customers, MDAs

    The Minister of Power, Works and Housing, Mr. Babatunde Fashola, has directed the electricity distribution companies (DisCos) to give prepaid meters to their customers including government Ministries, Departments and Agencies (MDAs).

    He spoke at the 14th ministerial monthly meeting with operators of the power sector, held at the National Control Centre, Osogbo, Osun State. The minister emphasised that the purpose of the Nigerian Electricity Supply Industry (NESI) is to ensure that citizens can access power safely, reliably, and consistently and that it must remain committed to ensuring the achievement of those objectives.

    Fashola reiterated government’s commitment to its responsibilities in the power sector through policies such as the Power Sector Payment Assurance Guarantee to ensure liquidity stability in the sector so that generating companies are paid for their services. He also stated that all stakeholders remain committed to their various roles in supplying and distributing power to ensure that the power sector functions effectively.

    He urged electricity customers to play their role in the success of the industry, through the timely payment of bills, ending the vandalism of power assets, and the assault of electricity workers who seek to install or read meters. Federal Government had started by the payment of an initial tranche of N374,551,000 to Abuja Electricity Distribution Company (AEDC) for outstanding MDA debts at the Federal Secretariat, Abuja.

    According to a communiqué issued at the end of the meeting, discussions focused on identifying, and finding practical solutions to critical issues facing the Nigerian Electricity Supply Industry.

    The Managing Director, Transmission Company of Nigeria, it said, highlighted the issue of unutilised load (previously described as load rejection) currently causing high system frequency on the national grid, and encouraged the industry to take necessary steps to address the problem. TCN restated its commitment to expand transmission infrastructure and improve its operation and performance within the power sector value chain.

    The Nigerian Electricity Regulatory Commission (NERC) assured of Federal Government’s commitment to tariffs that ensure a self-sustaining power sector and to supporting NERC in applying sanctions where appropriate to ensure operators comply with the rules.

    NERC highlighted the recently reconstituted commission’s focus on fair but firm regulation in the following areas: enforcing DisCo metering commitments, prepaid meters for MDAs, centralised management of market revenues collected from all customers, appropriate capitalisation of DisCos, and prudent procurement. NERC was tasked with ensuring fair play for consumers and providers within the sector.

    Osun State Governor, Ogbeni Rauf Aregbesola, acknowledged the gradual improvement of electricity supply especially in the state which hosts the National Control Centre. He acknowledged the importance of the Power Sector Recovery Plan as critical to ensuring accountability for losses, improving customer service, customer accessibility, safety, and performance in the sector.

  • TCN announces nine percent improvement 

    TCN announces nine percent improvement 

    The Market Operator of the Transmission Company of Nigeria (TCN) has announced a 9 percent improvement in energy delivered to DisCos from the Transmission Company of Nigeria for the month of February, as compared to January.

    A communique on the 14th meeting Ministry of power sectoral meeting that made this known yesterday said that the Minister of Power, Works and Housing, Babatunde Fashola urged electricity customers to play their role in the success of the industry, through the timely payment of bills, ending the vandalism of power assets, and the assault of electricity workers who seek to install or read meters. Federal Government had started by the payment of an initial tranche of =N=374,551,000 to Abuja Electricity Distribution Company (AEDC) for outstanding MDA debts at the Federal Secretariat, Abuja.

    The meeting was held in National Control Centre, Osogbo.

    The Governor of Osun State, Ogbeni Rauf Aregbesola and the Deputy Governor of the State, Otunba Grace Titilayo Laoye-Tomoriwere also present.

    The meeting focused on identifying, discussing, and finding practical solutions to critical issues facing the Nigerian Electricity Supply Industry.

    The operators were fully represented at the highest executive management levels, including a Commissioner of the Nigerian Electricity Regulatory Commission (NERC), Managing Directorsand CEOs of Generating Companies (GenCos), Distribution Companies (DisCos), and the Transmission Company of Nigeria (TCN), as well as various government agencies such as theNiger Delta Power Holding Company (NDPHC), the Nigerian Bulk Electricity Trader (NBET), Nigerian Electricity Liability Management Company (NELMCO) and Nigerian Electricity Management Services Agency (NEMSA) responsible for the regulation and development of the electricity industry.

    The Managing Director, Transmission Company of Nigeria, highlighted the issue of unutilized load (previously described as load rejection) currently causing high system frequency on the national grid, and encouraged the industry to take necessary steps to address the problem. TCN restated its commitment to expand transmission infrastructure and improve its operation and performance within the power sector value chain.

    The Vice Chairman, Nigerian Electricity Regulatory Commission affirmed the Federal Government’s expressed commitment to tariffs that ensure a self-sustaining power sector and to supporting NERC in applying sanctions where appropriate to ensure operators comply with the rules. NERC highlighted the recently reconstituted commission’s focus on fair but firm regulation in the following areas: enforcing DisCo metering commitments, prepaid meters for MDAs, centralised management of market revenues collected from all customers, appropriate capitalisation of DisCos, and prudent procurement.

    Minister emphasized that the purpose of the NESI is to ensure that citizens can access power safely, reliably, and consistently and that it must remain committed to ensuring the achievement of these objectives:

    NERC was tasked with ensuring fair play for consumers and providers within the sector.

    The Minister reiterated that the Federal Government is committed to its responsibilities in the power sector, through policies such as the Power Sector Payment Assurance Guarantee to ensure liquidity stability in the sector so that generating companies are paid for their services.

    He also stated that all stakeholders remain committed to their various roles in supplying and distributing power to ensure that the power sector functions effectively.

    The Governor of Osun state acknowledged the gradual improvement of electricity supply especially in Osun State which hosts the National Control Centre. Acknowledged the importance of the Power Sector Recovery Plan as critical to ensuring accountability for losses, improving customer service, customer accessibility, safety, and performance in the sector.

    The meeting received confirmation from Independent System Operator (ISO) that the intention of Paras Energy (a private generating company) to sell 60MW internationally will not jeopardize the power purchased by the Nigerian Bulk Electricity Trader (NBET) for use in the domestic market.

    NDPHC provided updates on host community connections in Egbema, and announced significant progress on Oronta and Omotosho which were previously limited by funding challenges. Progress was also announced on reconnecting Magboro community, subject to safety checks by the Nigerian Electricity Management Services Agency (NEMSA). Olorunsogo Power also stated that funding of road repairs in the host community has also been approved.

    TCN presented a report on the problem of unutilized load on the grid and committed working closely with the DisCos to eliminate the occurrence of the problem.

    Market Operator (TCN) announced a 9% improvement in energy delivered to DisCos from the Transmission Company of Nigeria for the month of February, as compared to January. Ikeja and Yola DisCos showed improved remittance to the Market Operator for services rendered in the month of February.  The Market Operator encouraged sector participants to fulfil all their obligations to ensure the success of the Power Sector Recovery Plan.

    NEMSA presented a report on its investigation of various customer complaints especially complaints related to the integrity of meters. The meeting acknowledged incidents of insider malpractice and the negative impact on customers and agreed on the need for vigilance to eliminate such cases.

    TCN presented a brief on ongoing works to address specific challenges and limitations around the country. TCN acknowledged the delay in replacing the damaged 60MVA transformer at Katampe which caused prolonged load shedding and poor service in parts of Maitama, Wuse II and Jabi in Abuja.

    NERC reported on stakeholder performance for 2016.  DisCos were ranked based on metering progress, NBET and MO remittance, amongst other indicators. Eko DisCo was ranked as the best performing Distribution Company, while Kaduna DisCo was ranked as the lowest.

    Okpai (Thermal Plant) and Jebba (Hydro Plants) were ranked as the best performing in their respective categories, based on indicators such as percentage availability and reporting compliance.

     

  • Fashola calls for regular collaboration with DISCOs

    The Minister of Works, Power and Housing, Babatunde Fashola, has called on stakeholders to ensure regular consultations with Electricity Distribution Companies (DISCOs) on power distribution.

    Fashola made the call when he visited the Omotosho Power Plant in Okitipupa local government area of Ondo State on Friday.

    The minister, who met with stakeholders, called for collaborative efforts with DISCOs on provision of adequate information on where power was needed at different points in time.

    He said, “At anytime, power is being generated and it must be consumed since there is no storage facility for power.

    “Once the power is generated without being consumed, it affects their facility and that is the reason why there is continuous adjustment for generation.

    “There should be synergy and communication between the power companies and DISCOs for even power distribution and to know the peak period of consumption of power both for domestic purposes and industrial usage.

    “In most cases, the peak period for domestic purposes starts at about 5:30 p.m. when everybody returns from work.

    “The peak period for industrial or official use starts by 9:00 a.m.

    “Stakeholders in the sector must align on their responsibilities to meet the demand of the consumers.”

    He said the host community would begin to enjoy full power supply from the plant by April when the first phase would be unveiled.

    NAN