The Nation Newspaper

Tag: DISCOS

  • FG set to demolish houses under power line

    …DisCos begins disconnection of structure under high tension

    …as NEMSA trains 70 electrical inspector

     

    Following the Federal Government policy that prohibits the building of any houses and other structures under the power line, the Nigeria Electricity Management Service Agency (NEMSA), on Monday insisted that government will definitely remove the structures.

    The Managing Director, of the agency, Engr. Peter Ewesor, disclosed this to reporters after declaring open, the induction and capacity building for 70 NEMSA engineers undergoing training at the National Power Training Institute of Nigeria (NAPTIN) in Abuja.

    Ewesor, who is also the Chief Electrical Inspector of the Federation, revealed that owing to the implementation of the policy, the 11 electricity distribution companies (DisCos) and the Transmission Company of Nigeria (TCN) have already commenced the disconnection of such structures under the high tension across the country.

    According to him, state governments have already inaugurated committees to remove the structure under the power line in their respective states. The disconnection exercise, according to him, is to discourage the dwellers from living under the power line.

    Ewesor explained that, owing to the situation report from the DisCos, interestedly, the owners of the structures are complying willingly because they have realized the risk of living under the power line.

    The NEMSA boss said that: “Recently the Federal Government has made a policy of ensuring that all the infrastructure and structures built within the right of way are actually removed.

    “As a first step of the policy, it is to ensure that all those infrastructure within the right of way, either within or under the power transmission line are first and foremost disconnected. And since after the policy, we have followed up with the DisCos and the Transmission Company of Nigeria to ensure that as the first step, these premises are disconnected to deter them to continue to stay under the line.

    “And a lot of state governments are setting up committees to ensure that even beyond the disconnection of the premises from the power supply system, that they are equally going to be removed. And these committees are already working and they are going to ensure that these premises are eventually going to be removed from under the lines.

    “But the first thing now is that all those people that build under the line we are disconnecting them, and we are getting the results from the DisCos telling us which areas they have complied. People are happy because they did not know the danger involved in them staying under the line.

    “But beyond that we are actually ensuring that it goes further. It is nationwide and the exercise is going on simultaneously within the country because we have the under the 11 DisCos spread across the country.”

    He also told the reporters that the rate of electrocution in the country has been on decrease because of the awareness that the agency has created and its technical enforcement in the industry.

    The decline in mortality from electrocution is still not noticeable because people are still counting previous casualties, he said.

    On meter, he said that the agency has three meter test stations in Kaduna, Oshodi and Port Harcourt that are presently being remodeled to catch up with modern technology.

    Ewesor noted that in order to cope with the influx of meters that would flood the industry as a result of the Meter Asset Provider regulation of the Federal Government, “we are already creating a meter testing station in Enugu, which is going to be completed by the end of this year. And we expect that first quarter of next year it will kick into operation. And we are equally starting the one in Kano to ensure we capture all the meters coming into the country.”

    He explained that the agency carries three types of test on the meters to ensure they are the right type, quality and that their accuracy are correct.

    Asked whether he would advise customers to buy the local or imported meters, the Chief Executive Officer, said the former should be preferable because of the easy access to their manufacturers and spare parts.

    Ewesor, who said that wooden electricity poles are no longer well treated, also noted that the concrete types are preferable.

  • DisCos fault govt’s directive on generation below optimal level

    Electricity Distribution Companies (DisCos) have faulted the National Control Centre’s (NCC’s) directive to generation companies (GenCos) to generate electricity below optimal level.

    They said it is a major hindrance to the nation’s drive towards efficient power supply. This, they argued, is because of the low transmission capacity in the country.

    Association of Electricity Distributors (ANED) Research and Advocacy Executive Director, Mr. Sunday Oduntan, who spoke with reporters in Lagos at weekend, said while DisCos and its umbrella body, ANED were not interested in any controversies in the sector, ANED would continue to demand adequate  power supply for Nigerians.

    He said: “We want Nigerians to know that the distribution capacity of all the 11 DisCos is 6, 288megawatts (Mw). This is according to the Transmission Company of Nigeria (TCN) stress test that was conducted in 2015.

    “This is not our figure, this is the figure from the TCN side. Now, what we are getting from them is far too low than what we are supposed to be getting.”

    Only last week, the GenCos threatened to shut their plants over repeated directives by the NCC to generate below optimal level.

    Association of Power Generation Companies (APGC) Executive Secretary, Dr Joy Ogaji, said the GenCos were facing  lower capacity utilisation having to operate their plants far from the baseline settings to as low as about 50 per cent of total available power capacity.

    Citing last April, Ogaji said daily, the GenCos had an average capacity of 7, 484 Mw, but that the Transmission Company of Nigeria (TCN) transmitted only an average of 3985 Mw, about 53 per cent of the available capacity.

    ANED said the implication of this trend in power generation is that DisCos “are not able to supply enough power to (our) customers and we are now making Nigerians to be aware that the shortage of power supply or lack of power is due to TCN’s constraints and persistent outages from the TCN’s interface. The GENCOs have actually confirmed that”.

    Oduntan urged the government to  address the transmission bottlenecks, noting that the development is negative for DisCos’ business and customers.

    He said: “What we are having is a suppressed tariff regime that is not cost reflective. A tariff that was calculated on the wrong assumption that by 2018, we would be generating over 7,000Mw. The absence of that level of generation means that we are having more shortfalls in the market. The situation is now far worse than when we are getting far lower than expected from TCN.”

    Meanwhile, Ibadan Electricity Distribution Company (IBEDC) said it has invested over N11.5 billion in metering, network upgrade and rehabilitation, among others.

    Its Managing Director/Chief Executive Officer, Mr. John Donnachie, who spoke through the firm’s Chief Operating Officer, Mr. John Ayodele, spoke when the management took business and energy reporters on facility tour of the DisCo in Ibadan at the weekend.

    Some of the facilities visited include the Asset and Customer Enumeration, Raymond Zard’s 500mva transformer, Ibadan North 15mva injection substation and a warehouse with uninstalled customer meters and statistical meters for transformer including supplies from a local manufacturer – Momas Electricity Meters Manufacturing Company Limited (MEMMCOL).

    Donnachie said: “As part of our unwavering commitment to our mission to distributing power, changing lives, we have in the past six months invested over N11.5 bllion in major capital projects. These span across our franchise area covering – Oyo, Ogun, Osun, Kwara; parts of Kogi, Niger and Ekiti States.

    “These projects are major game changers for IBEDC as a business and for our esteemed customers, which have significantly improved our service delivery, quality and quantity of power supply”.

    He said: ‘’Recently, we commenced the procurement and supply of 10,000 distribution transformer (DT) meters at a cost of N4billion. These DT Meters will greatly reduce the challenge of estimated bills and ensure customers without meters are billed more accurately through its energy audit, accounting functionalities, and above all, assist in our technical, commercial and collection (TC&C) losses.

    “In line with reducing the incidence of estimated bills, we have commenced our meter roll out with a first batch of 48,470 energy meters of various ratings and capacities. This includes 35,000 single-phase, 12,000 three-phase, 1,470 whole current, C.T-Operated and Statistical Meters all at a sum of N3.1 billion, ahead of the meter asset provider (MAP) initiative being finalised by the Nigerian Electricity Regulatory Commission (NERC) and the DisCos.

    “The continuous metering of maximum demand (MD) customers is also in place with the deployment of 13 high voltage energy meters and delivery of 912 low voltage maximum demand energy meters at a cost of N405 million. To further support the huge metering expenditure, we have invested extensively in the supply and installation of Advanced Metering Infrastructure (AMI) systems at over N1 billion, this investment is critical to optimally implement the functionalities of DT Meters. As we speak, we have recently received 95 per cent of credited advance payment for metering implementation (CAPMI) meters for deployment for those that paid.

    “To further reduce safety related accidents and to achieve Vision Zero and Safety Culture of IBEDC, the Board has awarded a whopping sum of N1.47 billion for a major overhaul of the Health, Safety and Environment department. The project will deliver on over 60 critical need areas with major focus on procurement and deployment of PPEs, IPEs, signages, labels and symbols. Furthermore, the project is expected to map the layouts of 114 substations to develop conceptual site models, training on emergency techniques, solid waste and hazardous management programme, production of occupational health and safety environmental policies and framework for all technical and non-technical staff. In addition, it will, ultimately, aid us in attaining the certification required, thereby making us an internationally recognised health hazard compliant organisation,” Donnachie said.

    The ongoing Asset and Customer Enumeration estimated at N5 billion has started across the franchise and is scheduled for completion early next year.

  • DisCos fault govt’s directive on generation below optimal level

    Electricity Distribution Companies (DisCos) have faulted the National Control Centre’s (NCC’s) directive to generation companies (GenCos) to generate electricity below optimal level.

    They said it is a major hindrance to the nation’s drive towards efficient power supply. This, they argued, is because of the low transmission capacity in the country.

    Association of Electricity Distributors (ANED) Research and Advocacy Executive Director, Mr. Sunday Oduntan, who spoke with reporters in Lagos at weekend, said while DisCos and its umbrella body, ANED were not interested in any controversies in the sector, ANED would continue to demand adequate  power supply for Nigerians.

    He said: “We want Nigerians to know that the distribution capacity of all the 11 DisCos is 6, 288megawatts (Mw). This is according to the Transmission Company of Nigeria (TCN) stress test that was conducted in 2015.

    “This is not our figure, this is the figure from the TCN side. Now, what we are getting from them is far too low than what we are supposed to be getting.”

    Only last week, the GenCos threatened to shut their plants over repeated directives by the NCC to generate below optimal level.

    Association of Power Generation Companies (APGC) Executive Secretary, Dr Joy Ogaji, said the GenCos were facing  lower capacity utilisation having to operate their plants far from the baseline settings to as low as about 50 per cent of total available power capacity.

    Citing last April, Ogaji said daily, the GenCos had an average capacity of 7, 484 Mw, but that the Transmission Company of Nigeria (TCN) transmitted only an average of 3985 Mw, about 53 per cent of the available capacity.

    ANED said the implication of this trend in power generation is that DisCos “are not able to supply enough power to (our) customers and we are now making Nigerians to be aware that the shortage of power supply or lack of power is due to TCN’s constraints and persistent outages from the TCN’s interface. The GENCOs have actually confirmed that”.

    Oduntan urged the government to  address the transmission bottlenecks, noting that the development is negative for DisCos’ business and customers.

    He said: “What we are having is a suppressed tariff regime that is not cost reflective. A tariff that was calculated on the wrong assumption that by 2018, we would be generating over 7,000Mw. The absence of that level of generation means that we are having more shortfalls in the market. The situation is now far worse than when we are getting far lower than expected from TCN.”

    Meanwhile, Ibadan Electricity Distribution Company (IBEDC) said it has invested over N11.5 billion in metering, network upgrade and rehabilitation, among others.

    Its Managing Director/Chief Executive Officer, Mr. John Donnachie, who spoke through the firm’s Chief Operating Officer, Mr. John Ayodele, spoke when the management took business and energy reporters on facility tour of the DisCo in Ibadan at the weekend.

    Some of the facilities visited include the Asset and Customer Enumeration, Raymond Zard’s 500mva transformer, Ibadan North 15mva injection substation and a warehouse with uninstalled customer meters and statistical meters for transformer including supplies from a local manufacturer – Momas Electricity Meters Manufacturing Company Limited (MEMMCOL).

    Donnachie said: “As part of our unwavering commitment to our mission to distributing power, changing lives, we have in the past six months invested over N11.5 bllion in major capital projects. These span across our franchise area covering – Oyo, Ogun, Osun, Kwara; parts of Kogi, Niger and Ekiti States.

    “These projects are major game changers for IBEDC as a business and for our esteemed customers, which have significantly improved our service delivery, quality and quantity of power supply”.

    He said: ‘’Recently, we commenced the procurement and supply of 10,000 distribution transformer (DT) meters at a cost of N4billion. These DT Meters will greatly reduce the challenge of estimated bills and ensure customers without meters are billed more accurately through its energy audit, accounting functionalities, and above all, assist in our technical, commercial and collection (TC&C) losses.

    “In line with reducing the incidence of estimated bills, we have commenced our meter roll out with a first batch of 48,470 energy meters of various ratings and capacities. This includes 35,000 single-phase, 12,000 three-phase, 1,470 whole current, C.T-Operated and Statistical Meters all at a sum of N3.1 billion, ahead of the meter asset provider (MAP) initiative being finalised by the Nigerian Electricity Regulatory Commission (NERC) and the DisCos.

    “The continuous metering of maximum demand (MD) customers is also in place with the deployment of 13 high voltage energy meters and delivery of 912 low voltage maximum demand energy meters at a cost of N405 million. To further support the huge metering expenditure, we have invested extensively in the supply and installation of Advanced Metering Infrastructure (AMI) systems at over N1 billion, this investment is critical to optimally implement the functionalities of DT Meters. As we speak, we have recently received 95 per cent of credited advance payment for metering implementation (CAPMI) meters for deployment for those that paid.

    “To further reduce safety related accidents and to achieve Vision Zero and Safety Culture of IBEDC, the Board has awarded a whopping sum of N1.47 billion for a major overhaul of the Health, Safety and Environment department. The project will deliver on over 60 critical need areas with major focus on procurement and deployment of PPEs, IPEs, signages, labels and symbols. Furthermore, the project is expected to map the layouts of 114 substations to develop conceptual site models, training on emergency techniques, solid waste and hazardous management programme, production of occupational health and safety environmental policies and framework for all technical and non-technical staff. In addition, it will, ultimately, aid us in attaining the certification required, thereby making us an internationally recognised health hazard compliant organisation,” Donnachie said.

    The ongoing Asset and Customer Enumeration estimated at N5 billion has started across the franchise and is scheduled for completion early next year.

     

  • DisCos to throw in the towel?

    SIR: After five years of privatisation characterised by ineptitude and abysmal performance, core investors of electricity distribution companies are reportedly planning to throw in the towel. This was coming on the heels of government’s determination to wield the big stick and correct the anomaly prevalent in the power sector for ages.

    Government’s position has already sent shivers down the spine of stakeholders especially DISCOs known to have persistently violated the rules of engagement. In its bid to blackmail the government to soft-pedal on certain decisions, the distribution companies registered the Association of Nigerian Electricity Distributors (ANED), to champion the interests of DISCOs and downplay their obvious incompetence. There have been raging wars of words and running battles between the minister in charge of power, Babatunde Fashola and ANED for quite some time now. The recurring public spats have since woken government to its responsibilities and exposed the weaknesses of DISCOs and their penchant for abusing the letters and the spirit of the Electric Power Sector Reform Act.

    Apparently reading the handwriting on the wall, some DISCOs have since affirmed their readiness to quit if their funds were made available to them by the federal government. Tukur Modibbo, chairman and chief executive, Jos Electricity Distribution Company, JEDCO, reportedly agreed to sell the power assets he bought at $82 million five years ago for $72 million. John Ayodele, the Chief Operating Officer Ibadan Electricity Distribution Company, on his part claimed that, “There was no accurate technical, physical due diligence on what Distribution Companies bought.’’ The distribution companies paid 1.4 billion dollars (about N427 billion) to acquire the distribution assets in 2013.

    The position of the chairman of Jos DISCO reflects the rising frustration of others as well to effectively run an important business dear to the growth and development of our country.

    Distribution companies are private ventures which must contend with the usual vagaries associated with businesses to survive. It is laughable that a business owner would want an official of government to ask him why he is not investing appropriately to boost his business. It was evident at the point of sale of the power assets that the DISCOs were technically incompetent but those in charge still went ahead to sell despite the concerns raised. The dummy sold to Nigerians by government of that era was that privatisation was the only solution to the intractable problems of power supply. Those who left the nation in darkness to satisfy their personal business interest will be judged harshly by posterity. How would they feel looking back at the bleak legacy they left behind?

    Truth no matter how long it is covered will in due time surface despite all odds.  Nigerians will quite agree that DISCOs added little or no value to the existing services. It is common to find many communities groaning in darkness for months as a result of minor faults. Responsibilities of the service providers are taken over by communities who levy themselves to expedite these repairs in order to have power supply. It is frustrating that at the end, DISCOs will still come forward with questionable bills resulting in unavoidable fracas with customers and their staff. In fact, it could be said without any contradiction that the state of power supply is worse now than in pre-privatisation era.

    Nigerians should no longer be held hostage by those who after due consideration have scored themselves low in technical and financial competencies of modern business. Those who bought the power assets judged the book by its cover. Power sector investment is capital intensive and the return on such investment evidently takes long time which only government could cope with unlike short term investors. Excellent and efficient power sector service delivery gives the desired impetus to socio-economic growth and technological development of nations. Nigeria must embrace this globally acclaimed fact and run with it.  Government should diligently discharge its responsibilities creditably without compromising existing standard for the benefit of a few powerful elements. It is only by doing it right that government could be brave enough to invoke the appropriate laws against any defaulting stakeholders in the power sector value chain especially DISCOs.

     

    • Sunday Onyemaechi Eze, sunnyeze02@yahoo.com

  • BPE: why Fed Govt is holding on to 40% stake in DisCos

    •Bureau explains revival mission

    The Bureau of Public Enterprises (BPE) is determined to revive some of the 147 privatised Federal Government enterprises, 37 per cent of which were said to be under-performing. The revival is for revenue generation and employment purposes. JOHN OFIKHENUA reports that the BPE is justifying government’s refusal to divest its 40 per cent stake in the electricity Distribution Companies (DisCos) to shore up revenue and create more jobs.

    The 11 Distribution companies supplying electricity to domestic and industrial consumers and their operational areas are presented below:

    • Kaduna Distribution Company – Kaduna, Zamfara, Sokoto and Kebbi

     

    • Kano Distribution Company – Jigawa, Kano and Katsina

     

    • Abuja Distribution Company – Niger, FCT, Nassarawa, and Kogi

     

    • Ibadan Distribution Company – Kwara, Oyo, Osun and Ogun

     

    • Eko Distribution Company -Lagos, Ogun and Agbara

     

    • Ikeja Distribution Company – Ikeja, Oshodi, Epe, Ikorodu, Kosofe, Ikosi-Isheri, Alimosho, Agege, part of Amuwo-Odofin, part of Mushin, Ojodu Berger and part of Ogun

     

    • Benin Distribution Company – Delta, Edo, Ondo and Ekiti states

     

    • Port Harcourt Distribution Company – Cross River, Akwa Ibom, Rivers and Bayelsa states Enugu Distribution Company Abia, Ebonyi, Enugu, Anambra and Imo states

     

    • Yola Distribution Company – Taraba, Adamawa, Borno and Yobe states

     

    • Jos Distribution Company – Benue, Gombe, Bauchi, and Plateau.

     

    THE Bureau of Public Enterprises (BPE) is set to revive non-performing privatised enterprises in its determination to create more jobs and widen the Federal Government tax sources.

    It (BPE) is optimistic that the full implementation of its Post Acquisition Plan (PAP) for the enterprises will be beneficial to communities, where such concerns are domiciled

    A stakeholders’/investors’ forum was recently organised in Abuja by the BPE to revitalise the bricks and mining, steel, automobile industry, services and agriculture sectors.

    At the opening of the forum, Vice President Yemi Osinbajo, who doubles as the Chairman of the National Council on Privatisation (NCP) Chairman, said the Federal Government has refurbished 140 public enterprises the Bureau’s 30 years of reform journey.

    He listed the affected enterprises across the various sectors of the economy as including: banking and insurance, oil and gas, power, hospitality, pensions and telecommunications.

    The reforms, according to the BPE chair, were in the form of full or partial privatisation, full or partial commercialisation and concession.

    Prof Osinbajo said: “The vast majority of these enterprises can be regarded as being productive and profitable. However, naturally, there is a small percentage of these enterprises which have not been able, for one reason or the other, to achieve success. The purpose of this forum is to address this.”

    BPE Director-General Alex Okoh explained that since the beginning of the privatisation programme in the 1980s, the Bureau has successfully privatised 142 enterprises by December, last year.

    Out of the 142, according to him, 94 enterprises have been successfully monitored. They cover critical sectors of the economy from the transportation to vehicle assembly plants, oil palm, cement, hospitality, fertiliser, bricks and clay, mines and steel, national facilities, oil and gas, ports, power and communication.

    Sixty-three per cent of the privatised enterprises are performing. Thirty-seven are not performing as expected that,” the BPE boss noted.

    He said that the BPE meeting with core investors in the six bricks and clay companies, mining firm, three automobile firms, two oil palm industries and two paper manufacturers between May and June was to achieve the objective.

    Besides, Okoh, who expressed satisfaction with the process, said the numerous engagements with the investors were to secure their full buy-in and support for the forum.

    He said: “I am happy to announce that all the 12 core investors we have selected for this pilot scheme have cooperated with the Bureau in the organisation of the forum, and they submitted their inputs and recommendations of what needs to be done to revive the enterprises and attract potential investors.  This would form part of the discussion that we will be holding today.”

    It was to further consolidate on the gains the Federal Government insisted on collaboration with stakeholders to activate moribund companies for full capacity utilisation and for the benefit of the citizenry.

    Okoh, therefore, told the stakeholders that the essence of the forum was to create a platform for the public and private sector operators to engage meaningfully and attract potential investors that would inject a new lease of life into the key sub-sectors of the economy.

    The BPE director-general also explained that the forum was to open the enterprises for potential investors to inject fresh ideas, capital and expertise into rejuvenating them.

    The urgent need for the enterprises’ revival according to the vice president, culminated in a directive to the National Council on Privatisation (NCP) to the BPE to, amongst other things, highlight the significant potential of these enterprises, interact with potential investors, engage the key stakeholders (including the relevant MDAs) and facilitate the resolution of all identified impediments that have prevented these companies from performing optimally.

    Osinbajo said: “Today’s forum represents a continuation of the Federal Government’s desire and commitment to put in place an enabling business environment and to create investment opportunities for the private sector.

    “Please recall that we signed three Executive Orders last year to actualise this desire and to address the following critical areas namely:

    • The promotion of transparency and efficiency in the business environment designed to facilitate the ease of doing business in the country;
    • Support for local content in public procurement by the Federal Government;
    • Timely submission of annual budgetary estimates by all statutory and non-statutory agencies, including companies owned by the Federal Government.

    “The impact of these Executive Orders is already being felt and resulted in Nigeria rising 24 places in the World Bank’s Ease of Doing Business rankings for 2017.

    “It is my anticipation that by bringing together policymakers, local and foreign investors, we will be able to engage in meaningful dialogue and develop a road map for reviving these enterprises and other non-performing enterprises.”

    Okoh listed the objectives of the privatisation programme expected to be achieved at the forum as:

    • To build a strong and competitive economy.
    • To re-focus the role of government in the economy.
    • To attract foreign investment and technology; to create higher skilled/paying jobs.
    • To bring the benefits of privatisation to the common man.

     

    Government defends

    stake in DisCos

     

    After the privatisation of the Power Holding Company of Nigeria (PHCN) Plc assets in 2013, the Federal Government retained 40 per cent equity in the DisCos. Despite having the BPE to represent government’s interest in the companies, their performance remained below average.

    Confronted with questions about the companies at the sideline of the forum, Okoh explained why government has not divested its stake in the firms despite the dire need of funds for revival.

    His words: “Power is a strategic utility and the government at this time is not comfortable to totally divesting the interest in such essential and core utility. We had proposed that over time as we see the performance of the new private sector investors holding 60 per cent in the Discos and their commitment to providing this key public utility, then the government can systematically divest its interest.

    “But, we have to be in a position that we are comfortable with how this key utility is being run, if not, there is the possibility that the government will be held hostage by the private sector people as far as that is concerned because a responsible government cannot wake up and not explain reasons for a blackout.”

    Okoh said that the government was weighing several options including, looking into whether the balance sheets have been compromised.

    The BPE chief suggested that analysing the situation to know “if the Discos balance sheets are compromised because they are not able to raise sufficient capital to improve the distribution network and provision of meters, then we have to look at the possibility of how to admit other investors who may have the capacity financially and other technical expertise to improve the distribution infrastructure.”

    He noted that the interest of the citizenry lay in improved power supply at a reasonable cost and not in the power play between the government and the DisCos.

    Despite the ailing condition of the assets and investors’ reluctance to inject more funds to rejuvenate them, the BPE boss said the government has not plan yet resell or re-privatise them.

    He, however, suggested ways out of whatever challenges being faced by the investors.

    Okoh said: “We cannot resell. It is not re-privatisation, it is already owned by the core investors, but if they make that strategic decision to admit additional investors, that will be fine.

    “And, if they admit that liquidity is the challenge and the way they want to solve it is through equity and not debt, then they can admit investors, but if it is a debt solution, then we can approach the banks – the BoI (Bank of Industry) and others.”

    He described privatisation as a way of raising money to make up for government shortages, instead of resorting to borrowing which should be a second option to resolving any financial gap that a corporate organisation or individual faces.

    According to him, the same principle should apply to a country when it is in a shortfall in its liquidity to fund developmental activities. Okoh insisted that the natural fallback situation should be the assets that have not been yielding any benefit to the country as a whole and privatise these companies to raise the liquidity to fund the existing gap.

    He said: “Borrowing or debts should be a sending options not your primary option because there is a cost to even borrowing which also comes back in terms of budgetary provisions that you have to service the debt.

    “The principle of realising the value of assets that you have accumulated in the period of boom should drive a government policy in terms of bridging its cash fall in times of gloom.”

    The success of the stakeholders’ forum will be determined with the implementation of the resolutions and recommendations made participants.

     

  • Debt disagreement with DISCOs: MAN urges Fed Govt to intervene

    The Manufacturers Associa-tion of Nigeria (MAN) has asked the Federal Government to intervene in the ongoing debt disagreements between the electricity distribution companies (DISCOs) and manufacturers to enable them access the stranded 2,000 mega watts of electricity.

    Making the call in Lagos, during the week, MAN President Dr Frank Jacobs said the condition given by the Nigerian Electricity Regulatory Commission (NERC) was impossible to achieve because of the size of the debt.

    “Some of the challenges we have with taking advantage of the stranded 2,000 mega watts of power is that the NERC has continued to insist that MAN members and consumers clear off outstanding debts to the DISCOs.

    “However, there have been disagreements on how much is really involved and that has not been resolved to date. The figures reeled out by the DISCOs are too high when compared with what our members claimed they owed,” he said.

    Jacobs explained that a consensus was reached by the DISCOs and MAN to approach the government to see what could be done to enable manufacturers take advantage of the stranded power.

    According to him, it would be a credit to the government if they can intervene and the stranded power becomes utilised.

    The MAN president also called on the government to be more inclined to creating enabling environment for the private sector to thrive, pointing out that while the private sector was at the forefront of driving economic growth, it needed an enabling environment to function properly.

    He said: “This means providing the necessary basic infrastructure to ensure that the macro-economic environment is suitable for business to thrive.

    “Business successes are determined by parameters such as exchange rates, interest rates, taxation and ease of doing business and we urge that these factors be addressed to encourage local and foreign investments.”

    According to Jacobs, if all these parameters are met, an enabling environment for business to thrive will be automatic.

     

  • Bluffing DisCOs

    The electricity distribution companies (DisCOs), the leprous fingers of the Jonathan-era power reforms regime, are getting more brazen by the day.  After feeding fat on their rogue trove of “estimated billing”, the industry’s new euphemism for billing at a premium for darkness, they now puff and bluff to high heavens: refund our investment money and take back your sick child!  Seriously?

    Now, this new rascality comes from their trade group, the Association of Nigerian Electricity Distributors (ANED), an otherwise legitimate trade group that is so haughty and reckless it now plays the merry parasite howling for the death of its host.  Is it not a goner too?

    Or, in Achebe-speak, the stupid man challenging his “chi”(Igbo for personal god; or what the Yoruba would call “Eleda”, roughly “the maker”) to a wrestling match.  Isn’t such a person gone bunkers?

    But why this sudden ANED rogue radicalism, not to enhance service but to further ingrain the DisCos’ current culture of absolutely no value?  The simple issue of pre-paid meters.

    For too long, the electricity consumer has been condemned to DisCo greed, growing fat for delivering no value, using the so-called “estimated billing” as newfound yo-yo to fleece long-suffering consumers, while supplying nothing but absolute darkness.

    For too long, they were too busy “eating” for them to hear the loud groans from their market.  But the moment Power Minister, Babatunde Fashola, SAN, went radical on the imperative of metering customers, and that DisCos had better shape in or shape out, their jaws suddenly dropped, knowing they might be swallowing the last sweet morsel or crushing the last sauce-suffused bone of rogue feasting!

    Now, faced with sure starvation — hardly illegitimate! — the DisCos now push ANED to perhaps the most laughable bout of amateurish bluff in Nigeria’s corporate history.  Nice try!

    But as ANED, the DisCo parasites delude themselves with the merry prospects of premature but total extinction — for if DisCos buckle, where is the threatened knuckle from ANED? — let the government stay firm.

    The Power Sector reforms envisaged a vibrant electricity market, not a neo-monopoly from the ashes of the old Electricity Corporation of Nigeria (ECN), National Electric Power Authority (NEPA) or even the stop-gap Power Holding Corporation of Nigeria (PHCN).

    Let the regulator, Nigerian Electricity Regulatory Commission (NERC), strictly apply the law.  By all means, be fair to the DisCos.  But be no less fair to the consumer, without who there would be no market to milk.

    Let the DisCos meter their consumers, and bill for what they supply.  Because the new meters are pre-paid, it’s a win-win.  DisCos are paid before service.  And the consumer gets full value for his power charge.

    Now, how can that be bad for anybody — except rogue DisCos sold to the sickly culture of earning money from selling darkness, as a key business growth strategy?

    As for ANED, let them concentrate on DisCo peer review, all aimed at improving service and value.  Otherwise, both ANED and the present DisCos’ business days could be numbered.

    Maybe it’s time to get a new breed of licencees to do the job — for the business of powering the country is too vital to be left to amateurish corporate blackmailers.

     

     

  • DisCos for sale

    With majority of the electricity distribution companies (DisCos) in dire financial straits and unable to break even in the past few years, there is desperate search for new investors to revive the power sector, reports Ibrahim Apekhade Yusuf

    Ordinarily, privatisation was meant to attract foreign and local investments, create jobs, stimulate every other sector of the economy, transfer skills and technology and make local products competitive by substantially erasing the over 40 per cent extra cost that the organised private sector says is added by the necessity of alternative power provision.

    But despite the much hype privatisation, the nation’s power situation in retrospect has remained unresolved if not worse off. That is the damning verdict of a few discerning Nigerians in their prognosis of the power sector.

    The reason for this is not far to seek: Almost five years after the 11 power distribution and six generating firms were handed over to some private investors, the DisCos have failed to recapitalise, provide services or meet obligations to the detriment of electricity consumers.

    The Federal Government, it would be recalled, handed over assets of the Power Holding Company of Nigeria (PHCN) to the investors on Friday, November 1, 2013.

    Nigeria’s power status

    Nigeria’s installed capacity is 6,953MW, but highest daily output as at October last year was about 4,600MW, considered too dismal for an economy experts say needs a minimum of 15,000MW. But United States Energy Information Agency data reveals that in 2016, installed generating capacity in Brazil was 150,338 megawatts; South Africa 42,000MW, and Egypt 33,000MW.

    Elsewhere, the World Bank cites Latin America and the Caribbean as examples where Performance-Based Regulation for setting multi-year tariffs and monitoring compliance with service quality standards by DisCos were effective. It identified Chile, Argentina and Peru as countries where privatisation led to greater efficiency, investment and competition. In Argentina for example, power generation post-privatisation, rose from about 13,000MW in 1992 to about 23,000MW in 2002.

    A case of square pegs in round holes

    Curiously, one factor said to be responsible for the morass in the system is the scramble for the power sector by otherwise ‘shylock investors.’

    Shamsuddeen Usman, a former National Planning Minister, confirmed recently that politicians and officials circumvented safeguards as they scrambled to corner stakes in the unbundled DisCos and GenCos.

    Usman, a former director-general of the TCPC, forerunner of the Bureau of Public Enterprises, recalled how transaction principles were “side-stepped and the outcome, therefore, influenced by political considerations as against economic and technical capacities of the eventual preferred bidders.”

    DisCos’ angst

    The inability of the power distribution companies (DisCos) to meet their obligations to customers is because they incur huge losses in the market, the Executive Director, Research and Planning, Association of Nigerian Electricity Distributors (ANED), Mr. Sunday Oduntan, has said.

    He said the power firms are recording a shortfall of N49.38 per kilowatts. They buy electricity at N80.88 and sell it to consumers at N31.50. He said the 11 DisCos lose billions of naira weekly, adding that the development makes it impossible for them to provide transformers, wires, meters and other equipment to customers.

    He also said the firms further suffer huge losses because of some customers who steal energy through meter by-pass, stressing that the DisCos and ANED frown at these untoward practices. Oduntan said this was why it was proving difficult for the firms to meet the rising demands of their customers.

    Capital remains a big issue

    Each of the 11 DisCos is said to require at least N220 billion for the metering of customers.

    The Power, Works and Housing Minister, Mr. Babatunde Raji Fashola made this disclosure at a public forum in Lagos recently.

    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.

    “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.

    Review of ownership structure

    Recent pronouncements by Vice-President Yemi Osinbajo urged the majority stakeholders in the power distribution companies to recapitalise or sell equity just as the Minister of State for Budget and Planning, Zainab Ahmed, said the government was considering reviewing the controversial power privatisation of 2013.

    Other concerned Nigerians who have raised their voices above the din in their quest for a radical review of the privatisation process that brought in most of the current investors from the DisCos, include tycoons, Aliko Dangote and Tony Elumelu.

    The Chairman of Heirs Holding and United Bank for Africa (UBA) Mr. Tony Elumelu had last year advised President Muhammadu Buhari to reconsider the ownership structure of the DisCos with a view to taking over controlling shares of the firms.

    Mr. Elumelu noted that “in as much as some existing investors might not like the idea, the Federal Government could not continue to allow the DisCos hold the nation down with inefficient power distribution.”

    His solution to the epileptic  power supply in the country is the “recapitalisation of the DisCos and then increase its stake from the current 49 per cent to 51 per cent and sell the controlling stakes to new investors, as the current operators have become obstacles to the realisation of the nation’s power capacity goal.”

    In search of new investors

    In its avowed quest to alter the dynamics in the power sector, the Federal Government has appointed the Transmission Company of Nigeria (TCN) to manage the N72 billion investments it plans to sink into the 11 electricity distribution companies (Discos) to upgrade their distribution infrastructure and networks.

    TCN has also berated the Discos for their failure to provide stable electricity services to the consumers, when the distribution networks of Togo and Republic of Benin provide stable power to their customers with about 80 per cent of electricity consumed in those countries coming from Nigeria.

    But in an apparent response to the challenge by the Minister of Power, Works and Housing, Mr. Babatunde Fashola, that they should either upgrade their operations or quit the business of electricity distribution in Nigeria, the private investors who bought the DisCos offered to hand over their assets to the federal government within 24 hours once they are paid compensation.

    The investors have, however, given fresh condition for them to meet the government’s expectations, saying the current N1.3 trillion financial gap created by the sector’s non-cost reflective tariff, must be addressed by the federal government.

    Speaking with journalists in Abuja, the Managing Director of TCN, Mr. Usman Mohammed, stated that Fashola had received an approval from the federal government for the TCN to manage the N72 billion planned investments in the Discos.

    Mohammed said the TCN got the approval because it already had a comprehensive systems study and plan on Nigeria’s electricity network, adding that the investment would help stabilise the country’s electricity grid.

    “Discos have low capacity; investments have not been done in the Discos, and you know it. We have commissioned so many substations; go and find out how many of these have been done by the Discos. That is why we are begging the government and anybody that is willing to listen to us that investments need to go to the Discos. We are actually working with the government to see that the last mile which is now the weakest link in the power value chain which is distribution, that investments are directed to that sector,” Mohammed said.

    He further explained: “In the past the government had not shown interest in putting money in the distribution, but recently the minister of power has approached the government and got it to approve N72 billion which will be invested in the Discos.

    “This is one milestone that will help us to also stabilise the grid. It is in our interest that distribution is rehabilitated and I can tell you we lost two transformers in Abuja because of poor distribution. If distribution is not fixed, it will affect us at the TCN. Government is investing in the Discos and it is TCN that is managing the investment. We are managing it on behalf of the minister of power,” Mohammed said.

    Jos DisCo takes the lead, Yola joins the moving train

    Expectedly, investor of $82 million in the Jos Electricity Distribution Company (Jos DISCO), Aura Energy Company (AURA), has placed its stake in the utility firm for sale for as low as $72 million as the bankruptcy and poor Returns on Investment (RoI) rocking the sector degenerated.

    Four months into the fifth anniversary of the historic handover, Chairman, AURA who doubles as Chief Executive Officer of Jos Electricity Distribution Company Plc., Mr. Tukur Modibbo, yesterday declared plan by the investor to quit.

    His company would be the second after Yola Electricity Distribution Company (Yola Disco) to quit.

    Maintaining on the sideline of a news conference organised by the Association of Electricity Distributors (ANED) in Abuja that DISCOs were not bankable, Modibbo added that hence their inability to fully obtain the required funding to invest in their distribution networks.

    The management of the company, he added, was ready to sell it off due to poor returns on investment.

    He decried the poor rate of non-returns on investors’ funds in the distribution value chain of the power sector.

    “The balance sheet of the DISCO s were not bankable, hence their inability to fully obtain the required funding to invest in their distribution networks,” he said.

    According to him, Jos DISCO is ready to give up its license if the Federal Government could refund the money invested in the utility.

    “We bought Jos DISCO for $82 million, we are ready to give it away for $72 million if we see buyers now, if government refunds the investors their money we will quit the business.”

    He, however, called on the Minister of Power, Works and Housing, Mr. Babatunde Fashola to meet with the investors to hear their challenges with a view to evolving possible solutions to the challenges in the sector.

    He said: “I was part of the team; we had to rely on records given to us by BPE. I can tell you that the records were not accurate as there was no technical audit of a financial audit of the firms when they were under PHCN.”

    The estimated Aggregate Technical, Collection and Commercial (ATC&C) losses, customer enumeration and metering requirement by BPE, Modibbo said, were wrong, coupled with huge old legacy debts which the DISCOs took from the N213 billion CBN loan. The investors are currently paying interest for the sum taken from the CBN.

    “We have invested much in the utility, but we have not made any gain,” he claimed, after about five years of being in the saddle.

    Like Jos, the Federal Government is set to offer two key power firms, Yola Electricity Distribution Company and Afam Power Plc, for sale to new core investors, investigation has shown.

    For the Yola Disco, this will be the second time the government will be selling the firm which covers Borno, Adamawa, Yobe and Taraba States.

    It was also learnt that the first core investor in the Yola Disco, Integrated Energy Distribution and Marketing Company, had yet to be paid back the $146.8m it invested for 51 per cent stake in the firm about three years after it exited through the declaration of force majeure.

    The Head of Public Communications, BPE, Amina Othman had reportedly confirmed that both the Yola Disco and Afam Power Plc were up for sale to new core investors in a telephone interview in Abuja.

    According to her, the privatisation agency is in the process of obtaining approval from the National Council on Privatisation for the appointment of transaction advisers who will be responsible for offering advisory services towards the sale of the electricity companies.

    She said, “We are at the stage of obtaining approval for the engagement of advisers for both transactions (Yola Disco and Afam Power Plc).

    “On the payment to the former investor in the Yola Disco, Integrated Energy and Distribution Marketing Company, the former investor is yet to be paid.”

    Following difficulty in running the Yola DisCo due to activities of the terrorist group, Boko Haram, Integrated Energy and Distribution Marketing Company had asked the government to buy back its 51 per cent stake in the firm.

    The former core investor had on six occasions (November 10, 2013, August 27, 2014, October 15, 2014, April 9, 2015, April 30, 2015 and May 13, 2015) given notices of force majeure to the government.

    The force majeure is a standard clause in most contracts and includes events like natural disasters, wars and other occurrences outside the power or control of the executing party that makes implementation of a contract impossible.

    Clause seven of the Share Purchase Agreement stated that in a war situation where the core investor could not operate, it could invoke force majeure on issues beyond its control.

    The Yola DisCo covers Adamawa, Borno, Taraba and Yobe states. Three of the states, Adamawa, Borno, and Yobe, have been mostly affected by the activities of Boko Haram and the subsequent war against the group.

    The Power Sub-Committee of the Technical Committee, National Council on Privatisation, recognised the reality of the force majeure.

    The recommendations of the sub-committee were deliberated on by the technical committee of the NCP at its meeting in April 2015 and it also acknowledged the basis for the declaration of force majeure.

    Inside sources who confided in The Nation are also certain that a few of the DisCos may are most likely going to further divest their shares as they are not finding things any easy.

    But how soon this move will happen, remains matter of conjecture.

     

     

  • Fed Govt okays TCN to oversee N72b investment in DisCos

    The Transmission Company of Nigeria (TCN) has received approval from the Federal Government to manage the N72 billion proposed investment in electricity distribution companies (DisCos).

    The Managing Director of TCN, Usman Mohammed, told reporters in Abuja the the planned investment is aimed at upgrading the distribution networks of the DisCos to provide stable electricity to consumers.

    He however said the DisCos have low capacity which has contributed to the weak distribution of electricity.

    He said: “DisCos have low capacity. Investments have not been done in the DisCos and you know it. We have commissioned so many substations; go and find out how many of these have been done by the DisCos.

    “That is why we are begging the government and anybody that is willing to listen to us that investments need to go to the DisCos. We are actually working with the government to see that the last mile which is now the weakest link in the power value chain which is distribution, that investments are directed to that sector.

    “In the past, the government had not shown interest in putting money in distribution, but recently the minister of power has approached the government and got it to approve N72 billion which will be invested in the DisCos.

    “This is one milestone that will help us to also stabilise the grid. It is in our interest that distribution is rehabilitated and I can tell you we lost two transformers in Abuja because of poor distribution. If distribution is not fixed, it will affect us at the TCN. Government is investing in the DisCos and it is TCN that is managing the investment. We are managing it on behalf of the minister of power.”

    Investors in the 11 DisCos said they were yet to make any profit from their $1.4 billion (N427 billion) investment, five years after they acquired distribution assets during the privatisation of the sector.

  • DisCos seek to quit power sector investment

    THE Electricity Distribution Companies (DisCos) yesterday notified the Minister of Power, Work and Housing Babatunde Fashola that they are ready to quit the business once they get refund of their investment from the Federal Government.

    The companies lamented that they had been running the assets at a loss, stressing that they bought the distribution companies without having physical access to them owing to the Nigerian Union of Electricity Employees’ (NUEE) objection to the privatisation of the Power Holding Company of Nigeria (PHCN).

    Speaking at a news conference in Abuja, the Executive Director, Association of Nigeria Electricity Distributors (ANED), Sunday Oduntan, said the briefing was to address the tariff gap in the electricity market.

    He added: “We are not advocating for the increase in tariff for consumers. We are just saying that this gap needs to be recognised and something needs to be done about it.”

    The DisCos called on the minister to avail them the opportunity of a roundtable deliberation on how to bridge the N1.3 trillion gap in their financial books that has become an impediment to the Nigerian Electricity Supply Industry (NESI) and the ability of the investors to meet their obligations to the consumers.

    But when asked why the DisCos were not quitting the business since they were running at a huge loss, he said the distribution firms in the last two years put in a force majeure twice for the government to take the licence and refund their money, but the government turned down the requests.

    Oduntan said: “The issue of us not quitting is that I am sure you will agree with me that somebody who has put so much money into a business cannot just walk away without getting his money back.

    “And we all know what happened to Yola in terms of payment after the investor had put in for force majeure and they have left the network long  ago and promises were made to pay them their money back and up till now, nothing has been paid.”

    He added that in the last five years, the DisCos have twice put in force majeure telling the government “please take your licence, please give us our money back, we are no more interested in this business. And the government on those two occasions refused. The last one was just last year”.

    As reporters pressed the investors to state how soon they would quit, if they get their money, the chairman, Jos Electricity Distribution Company, Alhaji Tukur Modibo, said they were ready to quit one minute after receiving their refund.

    He added that no investor is a father Christmas. The chairman offered to accept a discount of $10 million to exit the asset within 24 hours.

    His words: “We bought the DisCo for $82 million, but we are ready to collect $72 million to quit within 24 hours.”

    Also, Mr. Ambibola Odubiyi of the Abuja Electricity Distribution Company said “the whole power sector in Nigeria is weak”.

    He, however, called for caution, stressing that the firms were not quitters but they only require the cooperation of government to improve the power sector.

     

    TCN tells power firms to take cue from Togo, Benin

    THE Transmission Company of Nigeria (TCN) has asked Nigerians and the electricity distribution companies (DisCos) to take a cue from stable power network from the Republic of Benin and Togo that get 80 per cent of their power supply from the Nigeria.

    Citing how a stable network should be, its Managing Director, Mohammed Gur Usman, said: “The reality is that we need investments in the DisCos. We need to change the distribution network. Some of you may not know. Any of you who has the opportunity of entering Republic of Benin, 80 per cent of the electricity that is consumed in Benin and Togo is coming from Nigeria. ”

    The chief executive officer, who addressed reporters Monday night in Abuja, said: “Go to Benin, you will have a stable power, but why is there no stable power in Nigeria?  Why is it that they have stable power and we don’t have, it is because our distribution network is weak. Go to Togo or just Benin here, and see how a distribution network is supposed to be.”

    Usman revealed that the TCN is working through its functional planning system with several DisCos to build their distribution models for them.

    He noted that as at last week, the company recovered 693 containers of transmission equipment out of 800 containers from the port with the support of President Muhammed Buhari and the  Minister of Power Works and Housing Babatunde Fashola.

    Usman added that the TCN has secured €25 million from the European Union (EU) for the implementation of projects.