FG Off-sets N26bn MDA Debt to Discos against Their Debts to NBET

Chineme Okafor in Abuja
The federal government will convert the N25.9 billion electricity debts it recently verified that its Ministries, Departments and Agencies (MDAs) owed the 11 electricity distribution companies (Discos) to set off parts of the Discos’ debts to the Nigerian Bulk Electricity Trading Plc (NBET), the Minister of Power, Works and Housing, Mr. Babatunde Fashola, has disclosed.

Recently, the 11 Discos stated that the financial shortfall in the power market had reached N809 billion, but figures on their real debts to the market have remained quite debatable.

Similarly, in an August 2017 report on the summary of Discos’ invoices and remittances from the Market Operations Department of the Transmission Company of Nigeria (TCN), the Discos’ debt to the market was N120.7 billion.

Fashola however, said at the October edition of the monthly power sector operators meeting yesterday in Owerri that the government has approved the debt be set off against the Discos, and that it would soon communicate that decision to them.
“In the last month, specifically on Wednesday, October 4, 2017, the Federal Executive Council approved the verified sum of federal government MDA debts of N25.9 billion, and its payment by setting it off against the debts owed by the Discos to NBET.

“You will be receiving official communication of how these have been applied to reduce debts owed by Discos to NBET,” said Fashola, in his speech which was made available to THISDAY.
He also said the government was making progress in its efforts to recover electricity debts owed the market by its international customers like Niger Republic.

The minister said he got a letter from the Discos indicating their discomfort with some of the government’s new policies in the sector, notably its plans for solar power and mini grid systems.
On that, he stated that the country’s electricity law was enacted to create competition in the sector not monopoly.
He also said government has not taken a decision on what to do with the N39 billion it recently set aside for investment in metering in the Discos’ networks.

“The ESPRA did not contemplate a monopoly for any licensee unless it is expressly stated in the licence.
“It is my understanding that you fear that you will lose some income or some customers if government proceeds; and on the question of meters, you seek to have technical compatibility with what the licencee will operate,” he said.

According to him: “As for channelling investment into distribution assets through the Discos, government has not yet taken a position on what the best way forward will be. However, government is clear that a solution must be found quickly to the inability of Discos to take about 2000 megawatts of power that will imminently increase as we get more incremental power.

“In respect of possible investment in Distribution equipment you seek that Government should route the investment through the Discos. Understandably you are concerned about investment recovery and in your views, the solution is a tariff review.

“While your concerns about business viability, financial stability and cost recovery are well understood and indeed supported by the Electric Power Sector Perform Act of 2005 (EPSRA) which Government will respect; I must point out that Government’s focus is also strong on the issue of service to the people. There must be a balance somewhere in the middle,” Fashola, added.