Chineme Okafor writes that the federal government could further boost the financial capacity of the electricity market by concluding the verification and payment of debts owed the Discos by the ministries, departments and agencies
Coming on the heels of its recent approval of a N701billion financial security for the Nigerian Bulk Electricity Trading Plc (NBET) to conveniently trade with electricity generation companies (Gencos) in Nigeria’s electricity market, the federal government, last week disclosed that it would pay off verified debts owed electricity distribution companies (Discos) by its ministries, departments and agencies (MDAs).
The announcement was made at the 13th edition of the monthly power sector operators meeting, which the Minister of Power, Works and Housing, Mr. Babatunde Fashola, chaired at the premises of Transcorp Power in Ughelli, Delta State.
The planned payment could when effected, lift the Discos a bit from their financial challenges.
From a report presented at the meeting by a senior special assistant to the president on power, Damilola Ogunbiyi, the government indicated it would shortly conclude an on-going audit of the MDAs debts owed the Discos, and subsequently pay off all verified bills to them.
It explained that as a demonstration of its commitment to lead the power sector out of its financial recession, it would pay the outstanding bills on a first-come-first-served basis, and then proceed to ensure that future bills for power consumed by its agencies are paid for promptly.
Debts verification nears end
As was previously reported in THISDAY, the government and Discos have had running battles on the actual amount owed as unpaid electricity services to the MDAs, with figures from both sides often at variance.
However, Ogunbiyi’s report at the meeting indicated that a verification team working on the audit received claims currently estimated at N59.3 billion, but which are subject to further review for authentication before payment.
According to her, the Discos’ data from which the N59.3 billion debt figure was derived emanated from 208,030 invoices and 15,409 accounts.
Abuja Disco has the highest claims with N11.3 billion from 58,630 invoices and 4,228 accounts it submitted, while Benin Disco has the smallest claims amounting to about N0.3 billion from 2,467 invoices and accounts it respectively presented.
Also, 86 per cent of the debts, amounting to N51 billion, were reportedly owed by the top 100 customers, mainly composed of military and defence installations around the country.
Ogunbiyi also noted in her report that the verification process identified anomalies such as data duplication, submissions made with insufficient information, as well as details that were out of the scope of the verification exercise.
According to her, Discos would be asked to respond to such flagged issues within a week, after which unverified claims or invoices would be omitted, and then physical verification would take place in April before the payments are eventually made by the government.
From Ogunbiyi’s report, the government has indicated that it would fairly deal with the debt claims of the Discos, thus putting the responsibility of proof of claims squarely in the hands of the Discos. It had earlier stated that its response to the Discos’ debts would be based on individual basis as against the Discos’ alleged preference for collective settlement.
While the Discos had through their association, the Association of Nigeria Electricity Distributors (ANED) claimed in 2016, that debts owed them by government’s MDAs had reached N78 billion, thus impacting their operations, the Nigerian Electricity Regulatory Commission (NERC) however stated that the impact of the MDAs debts were only significant on about three of the Discos and not all of them.
Through ANED’s Director of Advocacy, Sunday Oduntan, the Discos said then that the debts had gone up to over N78.7 billion with some of them originating from 2013. Oduntan also gave a breakdown of the debts, where he claimed that the Nigerian Army alone owed Kaduna Electric N6.6 billion, Benin Disco – N2.3 billion, Eko Disco – N1.8 billion, and Ikeja Disco – N1.6 billion.
The Army, Oduntan also said owed Jos Disco N2 billion in unpaid electricity bills, Port Harcourt Disco – N1.3 billion, Yola Disco – N435 million, and Kano Disco – N301 million.
Following the Army on the debtors’ list, Oduntan said, 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.
He further said that federal ministries and parastatals owed the Discos N9.98 billion in unpaid electricity bills they accumulated over time, while state governments owed them N16.21 billion while local government owed N1.16 billion.
In addition, 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.
Notwithstanding claims of the debts’ impact on the Discos operations, a former acting chairman at the NERC, Dr. Anthony Akah, in an interview with THISDAY in January, stated that: “The significant impact of the MDA debt is more on about three Discos where you have more of government offices and the significance is not so much on the other Discos, yet the government is willing to solve this and has said the onus lies on the Discos to prove the debt owed them for the payments to be made.”
Other debt claims
From the verified figures of the federal government, the Discos are now left with their other claims from the state and local governments for unpaid electricity services.
It is expected they would equally pursue to recover these outstanding claims with the same zest they employed in getting the federal government to commit to settling its debts.
While the debts may not be as huge as that of the federal government, their payment and Discos’ insistence on prompt settlement of subsequent electricity bills by all tiers of government would expand ongoing push by the power companies to improve and sustain their revenue profiles in the market.
