Waiting on Discos to Validate MDAs’ Debts

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The Federal Government wants the 11 electricity distribution companies (Discos) to submit records of debt owed them for electricity supplied to its ministries, departments and agencies (MDAs) in the past. It said only this would facilitate repayments to them, but only four of the Discos have responded, prompting the issuance of a time limit to the remaining seven. Chineme Okafor writes

In 2016, the 11 Discos told Nigerians that debts owed them by MDAs of the Federal Government across the country for electricity supplied to them were huge and crippling their operations.
They said through their association – the Association of Nigerian Electricity Distributors (ANED) in May 2016- that the total electricity debts owed by the MDAs of the federal, state and local governments totalled N78.7 billion.

Briefing journalists then, ANED gave a breakdown of the debt profile, and noted that the Nigerian Army was the single largest debtor to the Discos with a reported debt figure of N38.75 billion.
Following the Army on the inglorious list which ANED showed was 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.

The association further said that federal ministries and parastatals owed the Discos N9.98 billion in unpaid electricity bills they accumulated over time, and that state governments owed them N16.21 billion while local government owed N1.16 billion.
The record according to ANED apportioned the Discos’ share of the debt as follows: Abuja Disco – 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 were reportedly owed N6.5 billion, Kaduna, Kano, Port Harcourt and Yola Discos were owed N8.2 billion, N1.2 billion, N6.88 billion and N2.46 billion respectively.
They, in this regard called on the government, especially the Federal Government to clear its share of the debt, adding that this constituted a huge drawback on their operations and the industry’s overall performance.

Perhaps wary of this and its import on the electricity market, the government picked up the complaints of the Discos on the MDAs debts, and in response requested each of them to submit their claims for verification by it and thereafter payment of the reconciled figures.
The government, in a seeming show of fair play and commitment to address the challenges of the market, said it would allow the Discos some good time to collate, verify and present their individual debt claims to it. It, however, noted that it would not accept a collective figure as debt claims because it would not guarantee the authenticity of such.

Request
Taking the Discos to task on transparent settlement of their claims, the government asked them to present their individual claims. It said it would reimburse every verified claims of the Discos on this ground and then opened a window of collaboration, which it expected them to maximise.
Few months after, it reminded the Discos that the window was still open and claimed that very few of them had leveraged it to claim their entitlements.

Though nothing was said by the Discos on their sudden lack of enthusiasm for this, the government again came out to announce last Monday that just about four of them – Abuja, Ikeja, Yola, and Ibadan, had submitted their debts records, and they were being verified for payment on first come, first serve basis.

Considering the sort of pressure applied by the Discos in their initial requests and claims of impacts of debts on their operations, experts in electricity market cash flow expected that they would have made the most of the window to claim their unpaid debts, but this has not been the case.
The government, in response to this lethargic approach of the Discos, then issued them a 15-day time limit which should expire by the end of February, to submit their records.

No Verification, No Payment
Though it did not state what would be its next line of action if the Discos fail to heed its request, the government however stated that seven of the 11 Discos that are yet to submit accurate records of their alleged MDAs debts would have just 15 days to turn in their records for verification.

It explained that Eko, Enugu, Port Harcourt, Jos, Kaduna, Kano, and Benin Discos have not responded to this call, indicating that they perhaps do not have accurate data to back their claims.
While the 11 Discos consistently claimed that the MDAs were running into billions of naira, they however appeared to have tarried in submitting their records to the government for verification, a development industry experts said was strange.

The communiqué, which contained the government’s deadline to the Discos was from the 12th edition of the monthly power sector operators’ meeting which was hosted by Ibadan Disco at its Olorunsogo substation.

The meeting was supervised the Minister of Power, Works and Housing, Mr. Babatunde Fashola, and explained that the call for the debts verification were parts of attempts by the government to solve the sector’s lingering financial struggles.

“The meeting also noted the steps taken to address the liquidity issues (currently limiting the functioning of the sector), through the work currently underway to identify, verify and pay MDA debts to Discos, as well as gas debts and generation debts.
“It was noted that Abuja, Ikeja, Ibadan and Yola Disco have complied with data requirements, and verification of their submission is underway on a first come, first serve basis.

“A deadline of February 28, 2017, was issued to receive submissions on MDA debts from Discos and February 17, 2017, was set as a deadline for submission of audited and management accounts,” the communiqué stated.

While it is not clear if the government would extend the verification window upon the expiration of the current 15-day deadline given to the Discos, what is however certain is that it would not pay Discos’ debts it did not verify.

This therefore suggests that for as long as their claims are unverified by the government, payments would never come to them for electricity supplied to the MDAs in the past.