Association of Electricity Distribution Companies (ANED) have said that any attempt to centralise the Discos’ revenue accounts will not only be tantamount to nationalisation, but also send wrong signals to domestic and international investors that Nigeria is not fully open for private sector investment.
Such action, they observed, will run counter to the objective of the National Electricity Power Policy of year 2001 and the Electric Power Sector Reform Act of 2005 of the private sector-owned and managed electricity sector.
Discos under ANED, in a newspaper advertorial yesterday, stated that “Nigeria cannot have a supposedly private sector-owned and managed business in which the government now seizes control of its revenues, saying it is a contradiction in terms and practice.
“The same principle applies to any consideration of regulations or government action that intrudes into corporate responsibilities of procurement, financial management or personnel management.”
The Discos further stated that it will endanger the ability of the government to hold the Discos responsible for their performance at the minimum, and at worse amounts to government takeover.
“It would absolutely preclude further private sector investment to the sector,” they say.
On the Deficiency of corporate governance at the Disco level, the distribution companies insist that this is another deliberate distraction from the issues and urgent requirement to address the liquidity challenges existing in the sector.
“Our challenge is not so much inadequate corporate governance as it is the failure of the government to meet the requirements of our performance agreement with the Bureau of public enterprise. To date, the government has not met the privatisation transaction foundation requirements,” they said.
For them, the Federal Government has not provided N100 billion in subsidy it promised the sector, have not made payment of MDA electricity obligation and have not ensured that the Discos have debt free financial books and implementing a cost reflective tariff.
“All the aforementioned hold significant value towards the ability of discos to improve their service delivery to their valued customers and not the issue of governance,” they said.
Indeed, the issue of value chain is commercial and not one of corporate governance. Of note is that the government, in accordance with the privatisation transaction terms has a representative of its 40 percent equity on the respective boards of the discos, thereby providing for government oversight and transparency of discos operation,” they say.
Recent report indicate that Discos’ remittances to NBET for energy has fallen from an average of 65 percent in 2015 to 35 percent over 2016, whilst monthly revenue shortfalls have increased from an average of N9 billion in 2015 to N25 Billion in 2016.
The value of electricity revenue loss in 2016 alone was N534 billion owing to shortages in gas supply, frequency and line limitations and water levels management constraints.
ANED noted that it is imperative as discos to be able make investment in network upgrades, improved customer service, billing and collection, metering etc. all of which been major issues in the industry.
They further add that such investments will not happen unless the discos make the projected annual revenue requirements which enables access to finance for the required capital expenditure CAPAX.
The billions of naira Discos loss do not exactly reassure investors particularly foreign ones that NBET shall be able to deliver on its own obligations through the Gencos, in spite of the fixed N701 billion” says Ayodele Oni, an energy expert
Oni observed that Liquidity challenges among discos in the power sector have proved to be an almost immovable obstacle to the regular supply of electricity.
He further shares the Disco viewpoint that the historical shortfall doesn’t seem to have been addressed within Federal government initiative.
Discos were emphatic as they argue that there is need for them to be to be able make investment in network upgrades, improved customer service, billing and collection, metering etc. all of which been major issues in the power industry.
