The Nation Newspaper

Tag: power firms

  • Power firms to begin 100% remmittance Sept

    Power firms to begin 100% remmittance Sept

    • Baseline remittance increases by 25%

    The power sector privatisation programme will move to the next stage by September when all electricity distribution companies (DISCOs) are expected to remit 100 per cent  of their collections from customers. That is when the Nigerian Electricity Regulatory Commission (NERC) will change from the Interim Market Rules (IMR) to the Transition Electricity Market (TEM).

    When TEM takes off, the Market Operator (MO), which is the commercial counterpart of the generation companies (GENCOs) and DISCOs because it buys power from GENCOs and sells to DISCOs, will relinquish the role to the Nigerian Bulk Electricity Trading Plc (NBET).

    At the moment, the DISCOs operate baseline remittance, where their remittances are determined by revenue generation and power received.

    Based on these criteria, a DISCO has a minimum amount to pay. The baseline  has just been increased by 25 per cent, a step to preparing the utility firms for the full remittance.

    Before the increase, some DISCOs, such as Yola DISCO, that were considered commercially unviable due to issues it had with supply, had zero baseline remittance. With the increase, its baseline remittance is 25 per cent.

    But some juicy DISCOs, such as Ikeja, Eko, Ibadan, Abuja, Benin and Enugu have baseline remittances that range between 60 per cent to 98 per cent.

    An operator explained: “We take energy from the grid and supply to the customers. At the end of the month, the market operator (MO) gives us a bill of all the energy we have taken from the transmission because MO is part of the transmission sector. They (MO) give us bill, which we are supposed to pay 100 per cent but in the interim, it is different percentages for different DISCOs depending on the DISCO’s past record.

    “Once we pay that baseline remittance, whatever remains, the DISCO keeps for its operation but because we are not having the subsidy, which the government is supposed to reimburse for power consumers in R1 and R2 categories whose consumptions are subsidised, some DISCOs remit less than their stipulated baseline remittance.

    “Initially, the baseline remittance was pegged in line with interim market rules (IMR) where some DISCOs had zero to 35 per cent baseline remittance but now that it has been increased by 25 per cent, the DISCOs that had zero per cent before, are supposed to pay 25 per cent while those that had 35 per cent are supposed to pay 60 per cent.”

    It was learnt that the baseline remittance was increased to enable the MO pay for the power purchased from GENCOs and gas bought from suppliers and others that contribute in the supply value chain.

    “However, all these disparities will stop after the interim arrangement because when we move to TEM, sometime in September, everyone will be making 100 per cent remittance,” the operator said.

  • Power firms move to stop estimated billing

    Power firms move to stop estimated billing

    In line with the Nigerian Electricity Regulatory Commission (NERC) directive to power firms to provide metering plans and further reduce charges imposed on consumers, the management of the 11 power Distribution Companies (DISCOs) are fashioning out modalities to stop estimated billings and further ensure that consumers pay fair prices.

    The General Manager, Customer Services, Ikeja Electricity Distribution Companies (IKEDC), Ms Olubukola Ojuronpe, said the firms have, as part of their growth plans, want estimated bills to be stopped soon.

    Ojuronpe said each of the firms have expressed displeasure at the poor metering system in the country, and are ready to put a stop to huge charges.

    She said: “The new owners are angry with estimated billing. They do not want to see anything estimated billing again. They frown at the development, and want to put a stop to it to enable consumers have confidence in the system. They also share in the pains experienced by consumers at all levels.

    “KEPCO, the Korea-based technical partners to Ikeja Electricity Distribution Company would bring in meters in May 2014. The meters are going to be cost-effective and better, and would be given to as many consumers as possible. This is our own way of stopping estimated billing and further makes consumers to pay the right price.’’

    According to her, the movement from the state-owned electricity corporation to privately run power institutions ensures that good, efficient and cheaper services are provided to consumers to gain their confidence.

    ‘’Before, contractors are supplying meters on behalf of the government. But now, there is a paradigm shift from government to private companies’ electricity management system. Based on this, consumers must be treated fairly to encourage the industry’s growth,” she added.

    She said the new power investors are not happy with the developments in the sector, urging consumers to be patient with them. Power, she said, would improve as Ministry of Power, NERC, Chief Executive officers of the power firms and other stakeholders are meeting to proffer solution to the lingering power problems.

  • Fed Govt, Stockbrokers mull new funding for power firms

    The Federal Government and stockbrokers at the weekend reached consensus on the need to collaborate on a viable mechanism to provide long-term capital to support recently privatized power companies.

    The Federal Government, through the Ministry of Power, and Chartered Institute of Stockbrokers (CIS), the self-regulatory body that regulates the stockbroking practice, at the 3rd annual national workshop of the CIS expressed willingness to work together to address the financial challenges of the power firms.

    The Federal Government had in 2013 sold the unbundled power companies from the defunct Power Holding Company of Nigeria (PHCN) to private investors. Ten electricity distribution companies (discos) and five generation companies (gencos) were privatized and sold to new core investors.

    However, funding has remained a lingering challenge as the new investors struggle to raise huge funds required to rehabilitate the power companies and stabilize power supply to the populace.

    Worried by the funding challenge, Minister of Power, Professor Chinedo Nebo, at the weekend said the ministry was ready to work with the CIS to provide amenable funding for the discos and gencos.

    According to him, government is willing to work with the stockbroking community and other stakeholders in the capital market to overcome the funding challenge facing the power companies.

    President, Chartered Institute of Stockbrokers (CIS), Mr. Ariyo Olushekun, said stockbrokers would work with the government to create innovative financial solutions for the power companies noting that the Nigerian capital market has the capacity to meet the financing needs of the power companies.

    Nebo, who spoke through his senior special adviser, Mr. Frank Edozien, reiterated that government was committed to the delivery of steady power supply to the nation in a not too distant future and was doing everything possible to realise that aspiration.

    “The ministry of power is determined to deliver on the power agenda and we are willing to collaborate with CIS and the entire capital market community in that regard,” Nebo said.

    Olushekun commended the efforts of the Minister aimed at ensuring that the country enjoys steady power supply pointing out that power is very vital for economic development of the country.

    He noted that stockbrokers decided to focus on power and other key sectors because of their importance to the revitalization of the economy.

    “We are determined to keep generating new ideas and strategies, which hopefully, our policy makers will consider and incorporate into the planning process,” Olushekun said.

     

  • Govt must honour power firms contracts, says Sanusi

    Govt must honour power firms contracts, says Sanusi

    The Federal Government must respect and fulfil terms and conditions it signed with local and foreign investors that won power sector bids, Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi said at the weekend.

    Sanusi spoke during the 46th Annual Bankers’ Dinner organised by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos. According to him, investors will not take the government seriously, if for any reason it reneges on keeping its own side of the contracts.

    “Government must respect contracts signed on power. Under no circumstance should these contracts be revoked and I am happy that the power reforms contracts have not been revoked,” he said.

    Data provided by the Bureau of Public Enterprises (BPE) showed the assets for privatisation include 11 distribution companies (Discos) and six generation companies (Gencos) from the unbundled Power Holding Company of Nigeria (PHCN).

    The Discos winners include Abuja Electricity Distribution Company Plc, Benin Electricity Distribution Company Plc, Enugu Electricity Distribution Company Plc and Eko Electricity Distribution Company Plc, among others.

    Those who won Gencos include Ughelli Power Plc, Sapele Power Plc, Shiroro Power Plc, Geregu Power Plc, Afam Power Plc, and Kainji Power Plc.

    Bidding for these assets has been completed with preferred bidders named by government, but some entities that lost out have rejected the process, saying it was full of fraud. Many others, including those who won the bids, however, adjudged the process as transparent.

    On the economy, Sanusi said it is important for the government to start and continue building the fiscal buffers needed to protect the economy. He also urged government to go into a period of strong serious fiscal restraints and consolidation.

    “We must continue to build up the external reserves and protect the economy from external shocks to oil prices and focus on the strength and resilience of the banking system. Banks are not set up to invest in government bills alone, banks are not set up to use depositors’ funds to bet on the capital and real estate markets, banks are set up primarily to mobilise savings and move these savings into the real economy where real production, real jobs and real income are created,” he said.

    He explained that as at last Friday, foreign reserves stood at $45.68 billion, with the exchange rate kept stable within the announced band of N155 plus or minus three per cent.

    “In a year which removed 50 per cent of fuel subsidies, where you have very high increase in international food prices and energy prices, where you have general instability and where we had forecast that inflation might reach 14.5 per cent in August, inflation is still under 12 per cent,” he said.

    According to him, as at September, inflation was 11.3 per cent, but is expected that there might be an inching up in food inflation figures expected to come out on Monday (today). He explained that high reserves of more than a two-year high, stable exchange rates, relatively benign inflation, but obviously, very high interest rates and lending rates in the money market, are the prices Nigerians have to pay for the kind of economic stability being enjoyed.

    He said the International Monetary Fund (IMF) had concluded a financial stability assessment programme and was impressed by the work that has been done in the banking sector.

    “They were able to pronounce that we have put the banking crisis behind us. The Nigerian banking industry, with average capital adequacy ratio of 17 per cent, is one of the highest in terms of capitalisation in the world. The banks have strong liquidity position. We have worked with governance issues,” he said.

    Sanusi said the Asset Management Corporation of Nigeria (AMCON) had not just bought bad loans from banks, but recapitalised some rescued banks. “AMCON had to put in nothing less than N2.3 trillion just to fill the hole that had been left by the management of banks, and when I talk about hole, I am talking about negative capital. If that N2.3 trillion had not been put in, what would have been lost was N13 trillion in deposits and interbank,” he said.

    Sanusi said but for the AMCON intervention, many of the banks that were safe and healthy would have been brought down by the banks that had taken money from them, and that would have caused severe crisis in the sector.