FG defaults push up power sector debts to N102b

Defaults by the Federal Government on its obligatory payment to electricity distribution companies (Discos) for energy consumed, have pushed up the amount of money being owed to the nation’s debt-ridden power sector to a whopping N102.5 billion, according to BusinessDay findings.

According to findings from a source close to the Presidential Task force on Power (PTFP ) the Federal Government, through its ministries, departments and agencies (MDAs) is currently owing the distribution companies (Discos) about N34 billion, while the generating companies (Gencos) are being owed about N68.5 billion, making it a total of N102.3 billion.

Although the source declined name the various government entities in debt, “Nigerian Gencos are being owed about N68.5 billion, out of which the Nigerian Bulk Electricity Trading (NBET) Plc is responsible for N16.5 billion,” said Adeoye Fadeyibi, the managing director/CEO of Transcorp Ughelli, a power generation company (Genco).

These losses are hampering efforts by the various power firms in the country towards the funding of critical projects aimed at expanding their infrastructural assets and enhancing efficiency in service delivery.

Robert Dickerman, managing director/CEO of Enugu Electricity Distribution Company (Enugu Disco), revealed that the total business losses in the Nigerian Electricity Supply Industry (NESI) are currently estimated at about N20 billion per month or N240 billion per annum.

Consequently, “the Nigerian power industry collects less than 50 percent of money owed it by various entities,” lamented Dickerman.

“This crippling debt profile, unattractive bottom lines, and non-cost reflective tariffs have greatly constrained power firms in the NESI from accessing loans from commercial banks in order to pursue their customer metering ambitions,” said a PTFP official, who spoke with BusinessDay on the condition of anonymity, because he was not authorised to do so.

This mandated a N213 billion intervention fund from the Central Bank of Nigeria (CBN) to fill up the liquidity gap confronting energy firms in the NESI and facilitate capital project execution.

The CBN fund comes with a single digit interest rate, as well as a ten year repayment tenure and a two year moratorium or grace period.

According to industry data, there are six million electricity customers captured in the databases of the various Discos throughout the country, out of which only 50 percent are metered.

This creates a deficit of about three million meters and a huge need for capital intensive investments towards which many Discos continue to push.

In October 2015, the Ikeja Disco said it was going to commence the installation of 12,000 meters per month within its coverage area of service.

Through this initiative, the Disco also said it had projected to deploy approximately 300,000 meters to its residential, commercial and industrial customers for the period between September 2015 and December 2016.

Also in October, the Eko Disco announced its planned investment of N5.8 billion into the procurement of electricity meters, with a projection to roll out 400,000 meters in the next three years.

The company also said it had already procured 7,500 maximum demand (MD) meters at the cost of N2.8 billion and another 50,000 meters for non-maximum demand consumers.

In a similar vein, BusinessDay findings show that the Ibadan Electricity Distribution Company (IBEDC) has developed a 10-year metering plan, spanning through 2015 to 2024, with a projected total investment of N47.18 billion.

This metering plan by IBEDC is expected to have 80 percent of its customers metered by the end of 2018, as “over 300,000 customers would be metered annually, beginning from 2016 to 2024,” according to John Donnachie, the company’s managing director/CEO.

Over the weekend, the Abuja Electricity Distribution Company (AEDC) said it has committed more than N2 billion into the rehabilitation of legacy projects at different locations within its franchise area, even as over N1 billion has also been spent on projects that are currently being executed.

YANGE IKYAA