Privatisation: NERC, DISCOs Mull Review of Performance Agreement

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•Ibadan, Eko Discos lose N3.4bn unpaid bills monthly

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Following the refusal of the organised labour to allow the private investors have access to the power assets during privatisation, the Nigerian Electricity Regulatory Commission (NERC) and the power distribution companies are planning a review of the performance agreement signed with the investors as it relates to Aggregate Technical, Commercial & Collection (ATC & C) loss, THISDAY has learnt.

This is coming as Ibadan and Eko distribution companies are losing an average of N3.4 billion monthly as collection losses arising from non-payment of bills by customers.

ATC & C is the difference between the amount of electricity received by a Disco from the grid and the amount it invoices its customers plus the adjusted collections loss.

While the performance agreement stipulates that the Kann Consortium, which acquired Abuja Disco, will reduce the 35 per cent ATC & C loss it inherited by 36.5 per cent in five years; Vigeo Holdings, which inherited 40 per cent loss in Benin Disco, will reduce the loss by 30.4 per cent.

West Power & Gas inherited 35 per cent loss in Eko Disco and is contractually obligated to reduce it by 36.46 per cent; Interstate inherited 35 per cent in Enugu Disco with a mandate to reduce it by 19.14 per cent; Integrated Energy Distribution and Marketing Company met an opening loss of 35 per cent in Ibadan Disco and is obligated to reduce it by 36.31 per cent.

The opening loss in Ikeja Disco was 35 per cent and NEDC/KEPCO Consortium is required to reduce it by 28.54 per cent; the opening loss for Jos Disco was 40 per cent and Aura Energy is obligated it to meet 45.23 per cent in five years, while Sahelian Power inherited 40 per cent loss in Kano Disco and will meet 32.55 per cent in five years.

In Port Harcourt Disco, the opening loss inherited by 4Power, according to the performance agreement was 40 per cent and this is expected to be reduced by 37.25 per cent.
But the worsening collection losses of the Discos forced their monthly revenue remittance to drop further to 30 per cent from about 58 per cent in the early part of the year, according to the Market Operations (MO) department of the Transmission Company of Nigeria (TCN).

Though the MO blamed the sharp drop in revenue remittance on the Discos’ alleged disregard for market rules approved for the Transitional Electricity Market (TEM), the Discos have linked their poor remittance to the debt owed by Ministries, Departments and Agencies (MDAs), which has accumulated to over N100 billion, as well as refusal of customers to pay bills.

Speaking to journalists on the occasion of the third anniversary of the privatisation of the power sector, the Chief Executive Officer of Eko Electricity Distribution Company (EKEDC), Mr. Oladele Amoda, stated that the company loses 30 per cent (N1.8 billion) of the N6 billion projected monthly revenue as a result of MDAs’ debt and non-payment of bills by other customers.
Amoda threatened to publish the list of power thieves who bypass meters and steal electricity without paying bills.

He argued that ATC & C losses should be re-calibrated to reflect the realties that the investors met on the ground after acquiring the assets.
According to him, the labour did not allow the investors to have access to the power assets during the privatisation.

“We are still discussing with NERC. During privatisation, investors had no access to the companies because they were not allowed by the labour. It was when they took over the assets that they saw the black box,” Amoda said.

Amoda said despite the challenges, the investors recorded huge achievements, which the government would not have achieved if the assets had not been sold.

Also speaking in a joint press conference, the Managing Director of Ibadan Electricity Distribution Company (IBEDC), Mr. John Donnachie and his deputy, Mr. John Ayodele enumerated the various achievements of the Disco, despite losing N1.5 billion monthly revenue as a result of unpaid bills.

Donnachie stated that the company spent N4.5 billion for providing meters in 2016, while investment in network stabilisation initiatives, which was abandoned for 30 years billion.

According to him, the company has commenced under government ownership, has gulped nearly N1 the rehabilitation of its 122 substations at a cost of about N150 million each, with 29 substations already completed.

On his part, Ayodele said the Discos had no plan to increase tariffs, despite the liquidity challenges facing the companies, stressing that the owners of Ibadan Disco raised funds for network expansion and rehabilitation projects by “thinking outside the box.”