FG to Reconcile MDAs’ Huge Debts to 11 Discos

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Chineme Okafor in Abuja

The federal government has said that it will review the huge debts owed the 11 electricity distribution companies (Discos) by its ministries, departments and agencies (MDAs) with a view to paying them off once their statuses are ascertained.

The Minister of Power, Works and Housing, Mr. Babatunde Fashola disclosed this when he hosted the new Managing Director of Abuja Electricity Distribution Company (AEDC), Mr. Ernest Mupwaya in his office in Abuja.

Fashola said: “We need to verify some of the debts and stratify who owes what and who is owed what.”

He also urged AEDC to provide the government with helpful information to speed up the reconciliation of its debt.

In June, Fashola said the Debt Management Office (DMO) had initiated a financial plan to pay off the huge debt.

He had said that with the DMO’s plan which was in response to a letter he wrote to it requesting for alternative means of settling the debt, it will be paid off before the year runs out.

As at May, the Discos through their network – the Association of Nigerian Electricity Distributors (ANED), put the MDAs debt at about N78.7 billion, with the Nigerian Army as the single largest debtor to the Discos, having consumed without paying N38.75 billion worth of electricity overtime.
Also on the inglorious list is the Nigerian Airforce with N3.09 billion, Navy – 3.3 billion, Police – N4.66 billion, Customs – 528.78 million, Prisons – N895.6 million and Immigration – N47.8 million.
A further breakdown of the debt indicated that federal ministries and parastatals across the country owed the Discos N9.98 billion in unpaid electricity bills.

State governments also owed the Discos N16.21 billion while local government owed N1.16 billion.
The record equally showed that of the 11 Discos, Abuja is owed N18.6 billion, Benin – N5.9 billion, Eko – N8.6 billion, Enugu – N7.2 billion, Ibadan – N6.8 billion and Ikeja – N5.9 billion.
Others such as Jos is owed N6.5 billion, while Kaduna, Kano, Port Harcourt and Yola Discos are owed N8.2 billion, N1.2 billion, N6.88 billion and N2.46 billion respectively.

ANED’s Executive Director, Research and Advocacy, Mr. Sunday Oduntan stated then that the debt was impacting on the Discos’ operations, with their liquidity levels becoming tight.

Meanwhile, Mupwaya disclosed to Fashola that Abuja Disco has been unable to meet the request for a Letter of Credit (LC) to the Nigerian Bulk Electricity Trading Plc (NBET) and equally participate in the Central Bank of Nigeria (CBN) market support fund due to the huge debt owed it by the MDAs.
Mupwaya who highlighted the liquidity challenges of the Disco, said the Disco was already in negotiation with one of its debtors, the Federal Capital Development Authority (FCDA), which has agreed to pay it N500 million as part of the settlement process.

He also said the Disco would want Fashola to approve that it convert parts of the debt owed to it by the MDAs to a collateral for the LC it is required to post to the NBET.

“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 to be eligible for the CBN fund.