Debts owed the 11 electricity distribution companies by MDAs and the military, have risen to over N78 billion. Chineme Okafor writes that the situation could hamper the ability of Discos to deliver
Figures obtained from the 11 electricity distribution companies (Discos) in Nigeria’s electricity supply industry have shown that as at April 31, 2016, the various ministries, departments and agencies (MDAs) of the federal and state governments still owed them a total of N78, 676,366,684.22 .
Also, on this inglorious list of debtors to the Discos are the various military and paramilitary formations, as well as the Nigerian Police stations scattered across the country which actually owes a larger chunk of the debt of N50, 048, 702, 696.3 or 64 per cent.
The Discos- Abuja, Ibadan, Benin, Enugu, Eko, Port Harcourt, Ikeja, Kaduna, Kano, and Yola, as well as Jos all have bitter tales of how these debts had skyrocketed.
They stated at a recent briefing that such was a heavy burden on their operations. Mr. Sunday Oduntan who is the Director for Research of their representative platform, the Association of Nigerian Electricity Distributors (ANED) told reporters that so far, discussions on payment of these debts have not been very successful.
He stated that in view of the impact of the debts on the operations of the Discos, efforts to cut off supplies to these historical debtors have been initiated by the Discos.
What the huge debts means to Discos. Specifically, Oduntan gave a breakdown of the debts owed by the military, police and paramilitary formations to the Discos to include Abuja- N3,805,039,794.87, N371,945,359.84, N11,800,433.36 respectively; Benin – N1,837,363,099.47, N120,721,997.61, N2,713,562.91; Eko – N3,689,271,605.46, N158,315,423.73 and N4,558,968.69 respectively; Enugu -N897,346,450.10, N73,865,841.93 and N34,826,750.72; Ibadan – N2,527,003,645.51, N168,373,253.80 and N7,581,718.90; Ikeja – N2,781,453,670.00, N648,224,118.00 respectively; and Jos – N1,623,369,157.17, N649,243,065.99 and N11,038,786.04.
Also, the three formations owe Kaduna Disco the N2,053,947,838.95, N144,782,630.10, and N22,835,595.16; Kano – N619,847,824.60, N36,720,871.72; Port Harcourt – N1,710,382,864.36, N72,780,889.47, N11,931,786.31 and Yola – N935,990,027.02, N167,970,684.54 respectively. They all summed up to the outstanding N50, 048, 702, 696.3.
Other federal, states and local governments MDAs also owe the Discos -N4,909,382,489.92; N700,831,976.07 and N574,296,266.39, while the Prisons, Customs and Immigration owe the electricity distribution companies the sum of N533,600,628.01; N207,621,125.66 and N23,430,265.71 respectively.
Oduntan explained that the debt has defining impacts on the capacity of the Discos to continue to make investments in the distribution networks. He noted that key equipment such as transformer; consumer meters and others relevant to their operations are often procured in limited quantities because of the debt overhang.
He further stated that of all the debts owed the Discos that of the military remained a big task for the Discos to recover because of what he described as the oppressive attitudes of the military to staff of the Discos.
Similarly, industry experts have described the failure of the military and the MDAs to pay their electricity bills as unethical on the side of government who invited the Disco operators to take up management of the networks on the pledge of good faith and conducive business situations.
They stated that such debt overhang at the different levels of government was a moral constraint to the government who also expects that the Discos would follow through the service level agreements they signed with it when taking over the networks.
Further in their explanations, they noted that most of the revenues the Discos receive go into pay operating and maintenance costs.
They added that purchasing power and fuel are the single largest operating expenses that the industry has to meet, in addition to taxes, cost of salaries, materials, supplies, services, and a variety of other expenses which must be met.
Odutan claimed that the Discos do not make profit from their operations at the current state of affairs in the sector. He said today the country’s electric industry operates in a hybrid model of competition and regulation, adding that for the Discos to commit more money into network expansions and rebuilding, such huge debts owed them, must be recovered.
Past proposals that could be reconsidered
At inception, the Nigerian Electricity Regulatory Commission (NERC), which regulates the industry to ensure balance, said that it had made a proposal to the National Assembly to consider passing a law that could prevent debts for electricity consumed by strategic government formations and agencies from accumulating.
NERC had explained then that it proposed a strategy to the National Assembly to adopt the earmark strategy practised in the United States.
The strategy, according to commission stipulates that each MDA’s budget would have clear earmarks for paying electricity bills and with conditions that the money cannot be used for anything else.
The commissioned stressed then that should such funds which would be marked clearly as electricity bill payment be diverted to other purpose by any MDA, such agency would be deemed to have violated a parliamentary law, and then its officials punished accordingly.
NERC also suggested then that the National Assembly can as part of its oversight function, demand for the certificate of compliance to be sure that MDAs have paid their electricity bills to the Discos that service their networks.
NERC’s former chair, Dr. Sam Amadi had expressed confidence then that these measures, if adopted and implemented by the National Assembly, was capable of reversing the historical trend of government agencies owing for electricity supplied to them.