The management of Nigerian Bulk Electricity Trading plc (NBET) on Tuesday warned that the non-payment of statutory charges by the licensed distribution companies (Discos) may trigger liquidity crunch in the nation’s power sector.
To avert the crisis, NBET management has issued a payment notice to all the licensed Discos to ensure payment of backlog of all outstanding charges for capacity and energy invoiced for three months.
The distribution companies, allegedly defaulted to remit for February, March, and April 2015 after the take-off of the Transitional Electricity Market (TEM).
Under the arrangement, the TEM Supplementary Order provides that all the Discos who have not provided bank guarantees and default in payments shall have their revenues escrowed.
“NBET is concerned that after the commencement of the Transitional Electricity Market (TEM), Discos have continued to fail in meeting their payment obligations. The average payment by DisCos for the corresponding months were 80 percent in February, 70 percent in March and 54 percent in April.
“In issuing the demand notice, NBET management is taking the first step in seeking compliance by the DisCos noting that failure to arrest the trend will exacerbate the liquidity crunch in the sector.
“In the Demand Notice, NBET urged the Discos to comply with the TEM Order and Supplementary Order on the commencement of the Transitional Electricity Market (TEM) issued March 2015 by the Nigerian Electricity Regulatory Commission (NERC) and make full payment on or before Friday, July 10, 2015.
“Further, NBET indicated that it reserved the right to use every option within the law to seek settlement of the outstanding invoices,” NBET threatened.
According to a statement obtained by BusinessDay, the Bulk Trader holds a trading licence to purchase power from generation companies and resell to Discos.
“In preparation for TEM, the company entered into Power Purchase Agreements with Generation Companies for power purchase and into Vesting Contracts with each of the eleven Disco for resell. Eight of the Discos Vesting Contracts (VC) are backed by a payment security in form of a bank guarantee issued in favour of NBET.
“Demand notices have been issued to these Discos indicating that NBET may call on this security if full payment is not received.
“The TEM Supplementary Order stipulates that Discos who have not provided bank guarantees and default in payments shall have their revenues escrowed. NBET aims to enthrone discipline in the market by escrowing the payments of the defaulting Discos in compliance with the Supplementary Order,” NBET said.
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