Discos Lament FG’s Botched N100bn Electricity Subsidy

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Chineme Okafor in Abuja
The 11 electricity Distribution Companies (Discos) in Nigeria’s power sector have decried the failure of the federal government to fulfill its promise to provide a N100 billion subsidy for the power sector after its privatisation in November 2013.

The Discos alleged said the government was responsible for the poor funding of the transmission section of the sector, a development, which they said has led to the huge load rejection frequently experienced.
A statement on this was provided by their umbrella body – the Association of Nigerian Electricity Distributors (ANED), on Monday in Abuja. It was signed by ANED’s Director of Advocacy and Research, Mr. Sunday Oduntan.

Oduntan stated that the government, which holds 40 per cent equity in the power companies had agreed to provide many intervention measures in the performance agreement the Discos signed with the Bureau of Public Enterprises (BPE) during the privatisation process.

“To date, the government has not met the privatisation transaction foundational requirements of providing N100 billion in subsidies, payment of MDA (Ministries, Departments and Agencies) electricity obligations, ensuring that the Discos have debt free financial books, and implementing a cost reflective tariff,” he said in the statement.

On the transmission constraints, ANED doubted if the N50billion appropriated for TCN in the 2016 budget was released by half, adding: “This funding level is even more pitiful when, especially, measured against TCN’s estimate of $7.5 billion for its five-year expansion plan that is expected to take us to 10,000 megawatt (MW), from our current 4,500MW.”

The Discos noted that they can only recover their costs of operation when they have more energy delivered by the Transmission Company of Nigeria (TCN) in areas where they have customers, as against claims that the TCN often deliver energies to areas they do not want.

They further queried in the statement: “Should the Discos have to suffer financial losses due to the limitations associated with TCN’s wheeling constraints?”
ANED equally said that TCN which is still a public utility, “has remained underfunded over several decades.”

It added: “Such limited or underfunding has resulted in poor transmission infrastructure and planning, with the consequences of grid instability and limited wheeling capacity, adversely impacting the distribution and generation of electricity.”

They decried the continued shortage in TCN funding, saying it impedes the Discos’ ability to distribute power and has led to crashes in power turbines of generation companies (Gencos) because of TCN’s consistent requests on Gencos to shut down their units to avoid system collapses.