Nigeria’s electricity market strains on poor corporate governance by DisCos

A communiqué issued at the end of the 15th monthly electricity meeting by operators in Jos on May 8 has listed poor corporate governance in the operations of Nigeria’s eleven electricity distribution companies (DisCos) as a key factor responsible for the over N800billion liquidity gap in the Nigeria’s electricity market.

Nigeria’s electricity sector is hampered by the inability of the DisCos to pay other operators in the electricity value chain. The Nigerian Bulk Electricity Trader (NBET), electricity generation companies (GenCos) and the Transmission Commission of Nigeria (TCN) do not get up to 30 percent of the invoice value of power sent to DisCos.

This is even as electricity consumers in the country bemoan epileptic power situation wherein they are subjected to estimated billings by DisCos due to the DisCo’s failure to provide electricity meters.

“The lack of corporate governance is evidenced by their failure to provide audited accounts, improved services and urgent response to customer complaints, meters and network investment have shown inconsistencies in DisCo statements,” says the document.

While the Federal Government is expending resources to verify any claims accurately made against them by the DisCos, the government does not see commiserate actions by the DisCos to provide electricity meters for their customers or invest in their failing electricity distribution infrastructure.

The failure of DisCos to remit payment owed to NBET led to the approval by the Federal Government of N701billion Payment Assurance Guarantee to Generating Companies, to fill the payment gap

Babatunde Fashola, minister of Power, Works and Housing berated the DisCos association the Nigerian Electricity Distributors (ANED) for making incorrect statements regarding the plan to escrow accounts, which Distribution Companies themselves had agreed to as a condition before accessing low priced loans from the Federal Government of Nigeria.

“By failing to mention the fact that the conditions of these loans are not mandatory, but are terms of the credit facility, information advertised by ANED were stated to be misleading,” said the communique.

Investors in Nigeria’s power distribution sector had earlier kicked against the Federal Government’s plan to escrow revenue accounts of distribution companies (discos). They said through their association ANED that any attempt to go ahead with the plan was tantamount to nationalization or expropriation of the DISCOs.

However, the DisCos failed to disclose that this was a condition for obtaining over N200billion loan from the Central Bank of Nigeria to assist them shore up revenues due to poor collections.

 

ISAAC ANYAOGU