Chineme Okafor in Abuja
The federal government has again told electricity distribution companies (Discos) in Nigeria to stop the prevalent and unfair practice of making their customers procure and install electricity transformers for their use, saying it was the responsibility of the Discos to do that and not consumers.
The government said such practice has contributed to the loss of confidence in the country’s electricity market by consumers who are mostly forced by Discos servicing their networks to pay for transformers to be installed at their communities.
The Nigerian Electricity Regulatory Commission (NERC) had in this regard, outlawed in 2015 the practice of Discos relying on consumers to finance procurement and installation of electricity accessories like transformers, the government however reiterated its stance on the issue on Thursday in Abuja.
The Minister of Works, Power, and Housing, Babatunde Fashola, said this when he received the new Managing Director of Abuja Electricity Distribution Company (AEDC), Mr. Ernest Mupwaya in his office.
Fashola said: “Private purchase of transformers must stop because that is the responsibility of the Disco and that is what will bring confidence that the system is working.”
Mupwaya who provided the minister with AEDC’s current operational conditions, stated that the liquidity challenges of the country’s power sector has contributed to the inability of the Disco to post a Letter of Credit (LC) with the Nigerian Bulk Electricity Trading Plc (NBET) in line with extant demands of the sector’s transaction rules.
He also said Abuja Disco could not benefit from the Central Bank of Nigeria (CBN) power sector support fund because of the same issue.
“We seek the minister’s ‘No Objection’ to use a portion of the MDAs debts as collateral for the LC,” Mupwaya told Fashola, noting that the LC will boost the Disco’s credit worthiness and help it become eligible for the CBN support fund.
Fashola who responded to the request and claims of debt to the Disco by government’s ministries, departments and agencies, said: “We need to verify some of the debts and stratify who owes what and who is owed what.”
He urged AEDC to provide him with information that could help speed up this process.
The AEDC further said it had spent over N2 billion on infrastructure upgrade in its network, including replacing 348 faulty transformers.
It also alleged to have spent N218 million on clearing faulty high tension lines of about 4,420 kilometres, as well as another N400 million to modernise its billing and vending systems.
On metering, Mupwaya said 359,969 customers have been metered among its 876,820 customers.
He said for the large user customers that constitute 50 per cent of the revenue base: “Our projection is to meet your deadline to meter the maximum demand users this year including the MDAs.”
AEDC equally said over 50,000 meters have been installed for the other customer users and that plans to install another 80,000 this year, with 100,000 installation annually estimated at $150 million was underway.
While urging Fashola to fast track the MDAs debt payment, Mupwaya said the Federal Capital Territory (FCT) Minister, Mallam Mohammed has assured of paying N500 million from its debts.
He added that the electricity market will feel the impact when the money is paid.
“For the past six months, we have reduced our Aggregate Technical, Commercial and Collection (ATC&C) losses from 60 per cent to 39 per cent,” Mupwaya added.