The Nation Newspaper

Tag: Electricity Distribution Companies.(DISCOs)

  • Waiting for Fed Govt’s PSA review

    Electricity distribution companies (DisCos) are on the edge as they await the final review of their Performance Service Agreements (PSA) on December 31, this year, writes AKINOLA AJIBADE

    The 11 power distribution firms in the country are on edge as they await the final review of their performance deals with the Federal Government.

    Their assets of the DisCos, alongside those of six power generation companies were unbundled from the defunct Power Holding Company of Nigeria (PHCN) during the privatisation of the sector in 2013.

    The Federal Government had on January 1, 2015, signed the agreements with the power distribution firms, to keep a close tab on their operations.

    Billed to lapse on December 31, this year, the review would help to ascertain the level of the companies’performance.

    The firms include Abuja Electricity Distribution Company (AEDC), Eko Electricity Distribution Company (EKEDC), Ibadan Electricity Distribution Company (IBEDC), Benin Electricity Distribution Company(BEDC) and Enugu Electricity Distribution Company (EEDC).

    Others are Ikeja Electric (IE), Port Harcourt Electricity Distribution Company (PHEDC), Yola Electricity Distribution Company (YEDC), Kaduna Electricity Distribution Company (KEDC), Jos Electricity Distribution Company (JEDC) and Kano Electricity Distribution Company (KEDC).

    Since last October, when the Bureau of Public Enterprise(BPE) Director-General, Mr Alex Okoh, announced the decision of the Federal Government to scrutinise the affairs of the firms, Nigerians have been expressing their disappointment over the DisCos’ performance.

    They said the firms were not living up to expectations due to poor electricity supply.

    Nigerian Association of Energy  Economists (NAEE) President Prof Adeola Akinnisiju said there was nothing wrong with the review, adding that it would promote efficiency.

    Akinnisiju berated DisCos for their poor performance, stressing that the review would enable the government to discover the factors hindering DisCos’growth and put in place measures to solve the problem.

    He said issues, such as epileptic power supply and estimated billings, were major affecting the DisCos, urging the government to address them. He said when those issues were addressed, the sector would able to grow.

    Akinnisiju said: “Economies all over the world depend on constant electricity supply for growth and Nigeria cannot be an exception. The government had privatised the power sector to reposition the economy for better performance.

    “The economy refused to grow because there was no power. When electricity supply is constant, the consumers would willingly pay their bills.”

    He said the firms were selling power at outrageous prices and still pile up debts in the sector.

    A report from the Office of Vice President Prof Yemi Osinbajo corroborated this assertion. According to the report, the DisCos were issued a total invoice of N161.4 billion for energy received in the second quarter of last year from the Nigerian Electricity Bulk Trading Company(NBET) and they paid N53.7 billion, creating a deficit of N107.7 billion.

    The report stated that electricity supply was erratic as the country supply had an average of 3,975 megawatts (Mw) of electricity to its huge population, while 3,153 Mw was constrained from reaching consumers.

    Association of Power Generation Companies (APGC) Executive Secretary Dr Joy Ogaji said the DisCos owe the GenCos for the electricitysupplied to them through NBET.

    Similarly, the President, Renewable Energy Association of Nigeria, Mr Segun Adaju, said there was the need for the government to review DisCos’ level of compliance with contracts in the industry. He said when this happened, the firms would sit tight, since they knew that they would lose their jobs, once they were found wanting.

    Privatisation of the power sector, he said, fell short of expectations in areas, such as industry improvement, efficiency and reliability. He confirmed that efficiency was below just it was in the pre-privatisation era, stressing that the performance deals, must be reviewed.

    He urged the government to monitor the activities of the DisCos, saying  by so doing, the firms would know whether they were performing or not.

    He said the firms delayed in issuing pre-paid meters because of their selfish motives, saying DisCos were not interested in issuing pre-paid meters, because it is more profitable for them to continue the regime of estimated billings. The DisCos, according to him, were ready to issue pre-paid meters once the tariff is hiked.

    However, an industry source said the sector has recorded growth within the limits of the resources at its disposal.The source, who does not want to be mentioned, said the firms deserve a pass mark by the Federal Government.

    The firms, he said, were preparing for the exercise, which would mark the fifth anniversary of their performance agreements. The firms are blocking the loopholes through which they could be found wanting, the source claimed.

  • Are DisCos technically bankrupt?

    The electricity distribution companies (DisCos) are in need of funds, such that they cannot procure equipment let alone expand their networks to take loads and give Nigerians regular electricity. In recent years, the distribution segment has been labelled the weakest link in the power value chain, necessitating calls for recapitalisation of DisCos, EMEKA UGWUANYI writes.

    The recurring system collapse, rejection of loads by electricity distribution companies (DisCos) and the continuous drop in transmitted power, inability to promptly pay power generators and gas suppliers are pointers to the ills of the power sector.

    In the past, the transmission arm of the sector was regarded as the weakest link but, currently, the DisCos have taken over as the weakest link and they are not making any defence about it or efforts to improve on this status.

    At a power industry seminar organised for reporters in Lagos, one of the resource persons noted that power is a major hindrance to Nigeria’s objective to be one of world’s 20 economies by 2020. It is expected that the combined installed generation capacity in Nigeria will rise to 14,000Mw by 2020, in line with the power sector road map and Vision 2020. He noted that the vision is endangered because power supply is pivotal to growth and Nigeria is not close to the quantum of power that will grow the economy to that level.

    Specifically, he noted that the DisCos are technically bankrupt looking at the entire business, especially information technology and other infrastructure when benchmarked with international best practices.

    The analyst listed some of the challenges confronting the DisCos. According to him, electricity tariff needs to be adjusted to market reality or be fully subsidised. He listed inflation, foreign exchange challenge and other macroeconomic realties as part of DisCos’ problems.

    “DisCos have to pay for the power purchased and loads are rejected because they go where they make revenue losses through energy theft,’’ he said. He frowned on the cross-subsidisation of tariff.

    Transmission Company of Nigeria (TCN) Managing Director Mr. Usman Gur Mohammed called for the recapitalisation of the DisCos, noting that without boosting their operation, the efforts of the generation and transmission segments of the power value chain would be futile.

    He said: “When this administration came on board, transmission was the weakest link in the power value chain. But, as at today, transmission is not a weak link. We cannot say we have solved all the problems of transmission but any problem we have in transmission, we have a solution to it.

    “We raised the capacity of transmission from 5000Mw to 8100Mw in the last simulation we did in December 2018 and since then, Nigerians have seen all the capacity we have been adding, including those from Niger Delta Power Holding Company of Nigeria (NDPHC). We have raised $1.661 billion for investment in transmission and we are putting it across the country.

    “We have also changed the qualification criteria for doing projects in such a way that the mistake that happened in the past where we met 800 containers in the ports stranded for more than 15 years will not happen again. Since we came in, there is no container that came in that we have not recovered. Of 800 containers that have been stranded, we have recovered 775.

    “In spite of all that we are doing, the customers that are connected to the grid are only about 20, other people are connected through the distribution network. We, in TCN, have actually simulated the investment requirement of the DisCos and hired a consultant that certified what we have done. The investment requirement of the Discos is $4.3 billion.

    “If we don’t invest in the DisCos and expand the distribution network, there is no way Nigeria will get the benefit of business.”

    Vice President Yemi Osinbajo also confirmed that the DisCos are the weakest link. Osinbajo, who spoke at a forum in Abeokuta, the Ogun State capital, said the Federal Government has increased installed power generation capacity to 13,427 megawatts (Mw), while additional 660Mw is expected from some power plants before the end of the year.

    He said later, several solar power plants would come on stream. The national grid already has transmission capacity of 7000Mw,  from about 5000Mw. This is due to the completion of several transmission projects. On the contrary, the distribution capacity of the 11 distribution companies (DisCos) is significantly low hovering around 4000Mw. This low capacity has limited the capacity to deliver power to end-users, despite the substantial generation and transmission capacities. DisCos also lack the ability to provide distribution assets and metering to consumers..

    The Vice President acknowledged the need to expand the grid and to recapitalise the DisCos, among others. He stated that despite the efforts of the government, the evidence and structure of the market could not deliver on government’s promises for power for domestic and industrial use. As a result of this, a substantial change of strategy is necessary. There is a need for a change of strategy.

    He said: “At the heart of that strategy is recapitalisation of the DisCos first. We have to come up with more resources in one way or the other. Part of that recapitalisation process is in the Siemens’ phased electrification roadmap, which was commissioned by President Muhammadu Buhari recently. The whole idea of the roadmap is to deploy financing and technology on commercial terms agreed with transmission and distribution companies in partnership with the German Government and Siemens to increase transmission and distribution capacities to enable power delivery of at least 7000Mw to consumers.

    “In phase two, to eliminate all the bottlenecks in transmission and distribution to enable full utilisation of existing generation of power to deliver at least 11000Mw to consumers, and in phase three, to upgrade and expand generation, transmission and distribution for end-to-end power delivery of 25,000Mw.”

    On the other hand, Discos reportedly are only concerned with how to boost monthly revenue, especially through estimation billing system and deployment of modern technologies to facilitate bill collection, without reasonable investments to take more loads and give more power to consumers.

  • DisCos deny dropping load allocation

    ELECTRICITY Distribution Companies (DisCos) on Monday denied the allegation of the Transmission Company of Nigeria (TCN) that the system collapse that was experienced on Sunday was “due to high voltage following massive drop of load by DisCos.”

    Speaking with The Nation on phone, the General Manager, Corporate Affairs, Abuja Electricity Distribution Company ( AEDC), Mr. Oyebode Fadipe, said: “We didn’t drop any load.”

    Asked whether it was true that the DisCos dropped load allocation on Sunday, the Director, Research and Advocacy, Association of Nigeria Electricity Distributors (ANED), Mr. Sunday Odutan, said it is “not true.”

    Read Also: Why electricity metering is low – DisCos

    He said power allocation to the AEDC as at yesterday had increased to nearly 500mega watts (Mw). The company gets 13 percent of the total power generation from the national grid on daily basis. This shows that yesterday power generation was about 3,692Mw after the Benin inferno led to the system collapse.

    According to a statement by the General Manager Public Affairs, Mrs Ndidi Mbah, on Sunday, the high voltage also caused a fire incident in the 75MXreactor in the Benin Substation, Sapele Road in Benin City, Edo State.

     

  • FG, DisCos begins talk on use of remote NIPPs

    …Commissions Angwa Dosa project, raises supply to 18hours

     

    The Minister of Power Works and Housing, Babatunde Fashola, Electricity Distribution Companies (DisCos) has commenced deliberation with the Niger Delta Power Holding Company (NDPHC) on the operationalization of some National Integrated Power Projects (NIPPs) in remote areas.

    Some of the DisCos had cited excuse of remote villages and lack of economic sense as reasons they are yet to operaionalize some of the projects in villages.

    The NDPHC Managing Director, Chiedu Ugbo disclosed this to journalists, at the commissioning of the NPHC/NIPP (1 *15 MVA, 33/11KV) injection substation at Angwan Dosa, Kaduna.

    He noted that the DisCos made the explanation to the stakeholders at the 28th Monthly Power Sector and Stakeholders meeting in Kaduna.

    Read Also:Fashola: Estimated billings fueling conflict consumer, DisCos conflict

    Meanwhile, at the substation he told reporters that “At the power sector meeting today, we deliberated on that. DisCos have not taken them (completed projects) for so many reasons, especially what they called difficulty to operationalize the substations, especially when they are in very remote areas where they are in villages and it does not make any economic sense for them. But the ministry, the minister, the regulator, we are all working to see how the challenges will be resolved.”

    The NDPHC boss said that N300million is very critical to the service delivery of the Kaduna Electricity Distribution Company since it will ensure that the stranded generation in power plants are taken and delivered to Nigerians.

    Ugbo added that “it is 15MVA transformer substation stepped down from 33KV to 11KV. It also has two feeders going from here to the legislative quarters and to Rafin Gosa. It will serve this area; serve the Army Mechanized Division, several schools, several hospitals, several mosques, and several churches.”

    Quoting the DisCo, he noted that power supply in the area has increased from three hours to between 15 and 18 hours daily because of the substation.

    His said: “the Kaduna Electricity Distribution company told me that the average time they serve is between 15 and 18 hours they serve customers that are connected to it.”

     

  • FG receives N19b electricity payment from Niger, Benin

    FG receives N19b electricity payment from Niger, Benin

    The Minister of Power Works and Housing, Raji Babatunde Fashola Monday broke a good news to the Electricity Distribution Companies (DisCos) that the Federal Government has received $64,630,055 (N19,712,166,775) electricity bill payment from Niger Republic and Benin Republic.

    According to him, the Nigeria Electricity Bulk Trading Company (NBET) is expected to work out the modalities before onward distribution to the DisCos.

    He spoke at the 21st Monthly Power Sector Ministerial /Stakeholders meeting at the Asaba, Delta State that Benin Electricity Distribution Company (BEDC hosted.

    The minister had earlier commissioned the 215MVA Asaba sub-station transformer, which, he said, will reduce incidence of load shedding in the area.

    But speaking in the meeting, Fashola said that: “I have some good news for you as well. Some money has come in form the power we sell to Benin Republic and Niger Republic. People wonder why this is so. They are a product of treaties and agreements.

    “They also help our own economy.  So we have a total of $64,630,055 that has been recovered. So, NBET will work out the modality for distribution. And hopefully by next month, you too, should be able to report that you have received an alert.”

    The minister also announced that the Federal Executive Council had on approved to resolve a meter contract dispute that it entered with a contractor since 2003, but the government’s approval last Thursday resulted in a court settle which implies that the contractor can now have N37billion plus the interest that accrued over the time for provision of meters to the DisCos.

    Fashola urged the interested DisCos to liaise with the ministry and contractor for supply of meters to their customers, adding that the deal is strictly between the contractor and the power firm while the ministry is only to make the facilitation with the meter supplier.

    He however urged the parties to note that the agreements will reach on meter supply will be subject to the regulation that the Nigerian Electricity Regulatory Commission (NERC) is about to present.

    His words: “But on a progressive note, I am also happy to report that the approval by the Federal Executive Council to resolve a meter contract dispute entered into since 2003, has now culminated in a court settlement that was concluded on Thursday, the 9th of November.

    “What that means is that that contractor will now have N37billion plus the accrued interest of the money to make meters available to customers of DisCos. They have to work with the DisCos, so, DisCos who are interested in taking this over should contact the ministry, we will make the facilitation formally with the meters supplier. “We expect this to be bilateral contract between you and them. We don’t want to get involved. We are just going to create a link and a handshake. Some of you are presumably already talking to them to get ready because you know them.

    “The agreement you will reach with them will be subject to the regulations that is coming from NERC. So those who are concerned about meters as we promised something is being done and we are moving closer to implementation.”

    He revealed to the stakeholders that the Rural Electrification Agency (REA) has completed the guidelines for the operation of the Rural Electrification Fund.

    The minister explained that the fund is to provide partial capital payment (subsidy) rural electricity operators.

    The minister added that “what the fund seeks to do is to provide a partial capital payment by way of subsidy for technical assistance to eligible private rural power development operators and also to end use for communities for options as hybrid solar and to generally scale up rural access to electricity.”

    He said the fund is to facilitate investment in hybrid mini-grid, solar system and to generally scale up rural access to electricity.

    The minister noted that those that fund will serve are the unserved rural communities.

    The fund, according to him, will provide a minimum of $10,000 and maximum amount of $300,000 which 75% of the project cost.

    He said the REA will publish the guidelines and eligibility criterial in the national newspapers.

    Fashola said that the Nigeria Electricity Supply Industry (NESI) has been lucky this year benefiting from availability of water from the hydro and experiencing peace in the Niger Delta for adequate gas supply.

    He promised that even as the rain is receding, there is sufficient gas available for firing the turbines for adequate power supply for the rest of the year.

    Speaking, the Managing Director, Benin Electricity Distribution Company (BEDC), Mrs. Funke Osibudo had said that there has been a response of the Federal Government to the theft and vandalism of electricity installation through the Inspector General of Police who has established a special anti-vandal response force in the area of operation.

    She also announced that the company was making progress in the management of load and outage management.

    The Chief Executive Officer said that the BEDC has improved its bill collection method with the introduction of the billing calculator.

  • Fashola urges Nigerians to embrace solar energy

    Fashola urges Nigerians to embrace solar energy

    Mr Babatunde Fashola, the Minister of Power, Works and Housing, has advised Nigerians to embrace solar energy to reduce pressure on the national grid.

    Fashola gave the advice in Lagos at a book launch.

    The book titled “Solar Electricity Generation for off-grid communities in Nigeria”, was written by Mr Oladele Amoda, the Managing Director, Eko Electricity Distribution Company ( EKEDC ).

    Fashola advised Nigerians to invest in solar energy as solar energy remained energy for the future.

    “Solar energy is very important to reach Nigerians living in various communities that are difficult to reach by the Disco.

    “We are committed to incremental power and policies that will drive the power sector; Solar is one of the renewable energy,” he said.

    The minister, however, allayed fears of Electricity Distribution Companies ( Discos ) over the deployment of more solar power through mini-grids and other Federal Government initiatives aimed at improving service in the power sector.

    He commended Amoda’s initiative in authoring a book that would address power sector challenges, adding that Amoda was outstanding.

    He said that the book presentation was timely as power sector would start to witness dry session by next month

    The minister said that power generation had increased from 2,600 megawatts to 7, 000 megawatts, while power wheeled out was gradually increasing to 7,000 megawatts.

    Prof. Bart Nnaji, a former Minister of Power, commended Amoda for his painstaking research and knowledge input in a book that would address power sector challenges and proffered solutions.

    Nnaji, the Chairman of Geometric Power, said that Amoda had transformed the power sector under his watch as the managing director of Eko disco.

    He said that renewable energy remained a major focus to power sector growth and development in rural communities in Nigeria.

    He urged stakeholders in the power sector to support the minister in developing the sector to deliver desire results in the country.

    “Eko Disco was the best performing Disco during the privatisation era, so, am not suprised that Amoda authored a book.

    “Am not surprised to see an excellent managing director of Disco understood the prospects and challenges of the power sector,” he said.

    Amoda said that the essence of the book was to create awareness on important alternative energy in Nigeria as Nigerians could not continue to depend on the use of fossil fuel that was given environmental issues.

    He said that renewable energy also reduced incessant vandalism synonymous with conventional energy theft in the network.

    NAN

  • Elumelu to FG: Sell Discos to new investors

    Elumelu to FG: Sell Discos to new investors

    The federal government has been urged to reconsider the ownership structure of Electricity Distribution Companies (DisCos) with a view to taking over controlling shares of the firms.

    This call was made by the Chairman of Heirs Holding and United Bank for Africa (UBA) Mr. Tony Elumelu on the sidelines of the ongoing 23rd Nigerian Economic Summit holding in Abuja.

    Mr. Elumelu noted that “in as much as some existing investors might 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 “recapitalization 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 realization of the nation’s power capacity goal.”

    According to him, “our people are very enterprising and they want to succeed. But they need the right environment to succeed. I appreciate what the government is doing for electricity but we need to do more.  I empathize with the government on its efforts in that sector. But Mr. Vice President, I think there is a lot we can do to correct the ownership of that sector without affecting the property rights of the investors.  That sector must be dealt with it for us to have power to do business.”

    He added that “government, with over N700 billion provided.  In a few months’ time, that will be exhausted. The market should be able to sustain itself.  This is what I think.  The government has to take actions that will ensure the adequate funding of the operations of the Discos.

    “Mr. V.P, I know some of the operators in this sector will not like this.  This is my idea.  We cannot reverse what has been done.  But we can creatively address what has been done.

    “If government to my understanding has 49 per cent of the Discos and the private companies have 51. Can we ask these companies to recapitalize?  Let the FG recapitalize.  They will not be able to put in more capital.  So the federal government through the Federal Ministry of Finance Incorporated should increase federal government holding.”

    “Then post recapitalization, the federal government sells its controlling shares to new investors who have the financial wherewithal to properly finance the operations of the Discos.  This is important because in a situation where current operators don’t have the funds to run them, if the federal government wants to sell its shares in the discos, investors who should have brought in their capital won’t come in if the controlling shares continue to remain with the current operators.

    “When this is done, then we can have new investors who can come in and run the Discos efficiently.  It doesn’t matter where they come from but they should be investors who have the financial capacity and tested expertise to manage the distribution segment of the sector in such a way that they can deliver effective service.”

  • NSCDC, DISCOs, partner to combat vandalism of electrical installations

    NSCDC, DISCOs, partner to combat vandalism of electrical installations

    The Nigeria Security and Civil Defence Corps (NSCDC) and Electricity Distribution Companies (DISCOs) are collaborating to fight vandalism of electricity installations in the country.

    The Spokesperson of the Corps, Mr Emmanuel Okeh, disclosed this to the News Agency of Nigeria (NAN) in Abuja.

    “We are working closely with the Electricity Distribution Companies (DISCOs) to ensure adequate protection for these critical assets to avoid vandalism by unscrupulous elements,’’ Okeh said.

    He also said that the Corps had stepped up surveillance around electricity installations in the country to stem the tide of vandalism of the critical national asset.

    He said the Commandant-General of the Corps, Abdullahi Muhammadu, had directed all State Commands and the Arms Squad to work closely with the various Electricity Distribution Companies (DISCOs) to ensure adequate protection for the facilities.

    He said that the NSCDC had also intensified its enlightenment campaign in the media to dissuade members of the public from engaging in such “criminal act and economic sabotage’’.

    Okeh said that the Corps had recently arrested and paraded some vandals caught stealing armoured cables belonging to the Abuja Electricity Distribution Company (AEDC) based on its surveillance.

    He called on communities where these installations were domiciled to always promptly report any acts of vandalism to the NSCDC or the nearest security post.

    The NSCDC spokesperson also emphasised the need for more intelligence, logistics and patrol vehicles to enable the Corps to properly protect the numerous critical infrastructure in the country such as Electricity, Telecommunication installations and oil pipelines scattered across the country.

    The AEDC’s Head of Public Relations and Media, Mr Ahmed Shekarau, confirmed that the company was partnering with the NSCDC to fight the menace.

    “We have a multi-purpose strategy to check the menace; you remember we had visited the Commandant–General of the Nigerian Security and Civil Defence Corps, (NSCDC) on the partnership.

    “We have also visited the Inspector–General of Police , and he has agreed that the Force will collaborate with the AEDC to achieve the objective,’’ Shekarau said.

    He told NAN that vandalism of electrical installations was a major challenge to the operations of the company.

    NAN reports that activities of vandals had occurred in many areas in the FCT,especially in the Central Business District, and in such satellite towns as Lugbe, Kuje, Kubwa and Nyanya, resulting in power outage there.

    Shekarau said the number of cases of vandalism of the company’s installations assets was on the increase.

    “If I tell you the number of vandalism in Lugbe, last month alone, you will be shocked, and if I tell you the number of cables that were vandalised in Kuje, between last month and this month, you will also be shocked,” he said.

    He said that the AEDC was engaging members of the communities concerned to curtail the menace.

    “We are engaging with the communities on this issue, because if you look at the city centres where you even have light, you have street light, yet people still go and vandalise them; and in some of the places, the vandalism takes place in broad daylight,’’ The AEDC spokesman said.

  • DisCos promise to achieve metering soon

    DisCos promise to achieve metering soon

    …Say only MD customers are exempted from payment

     

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

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

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

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

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

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

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

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

     

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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