FG Asks Power Discos to Buckle down or Leave the Sector


*Directs NERC to enforce Discos’ service agreements

* Reveals Discos debts to NBET now N500bn

Chineme Okafor in Abuja

The federal government on Monday asked the 11 electricity distribution companies (Discos) in Nigeria’s electricity market to buckle down or get out and leave the business of power distribution for people who are willing to compete and uphold their obligations in the sector.

Suggesting the Discos have failed to live up to expectations in the industry, the government said it would not sit back and allow them hold Nigeria hostage with their poor performances.

It thus asked the Nigerian Electricity Regulatory Commission (NERC) to immediately step up its enforcement of the contracts of service of the Discos with regards to supply of meters, upgrade of their distribution networks and promotion of market efficiency.

Speaking to journalists at a briefing in Abuja, the Minister of Power, Works and Housing, Mr. Babatunde Fashola, explained that the government had not granted the Discos exclusivity over their distribution areas and as such the NERC could take regulatory decisions on the issuance of fresh distribution licences especially within areas that are underserved by the Discos.

Fashola also stated that the financial remittances of the Discos have been very poor, adding that at the moment, they owed the Nigerian Bulk Electricity Trading Plc (NBET) a whooping N500 billion as debts for electricity sold to them by NBET.

“It must be obvious to the ordinary person that the supply of power is now a private business in the hands of private operators and in the final end, in the hands of the Discos.

“But because of the critical and sensitive nature of power supply, government has not left the supply solely. Government at federal, state and local government, as well as former employees of PHCN hold 40 per cent of the shares in the Discos.

“In addition, government is responsible for regulating the behaviour and compliance through the NERC which is like what the Central Bank is to the banking sector,” said Fashola.

He further explained: “The law does not make it mandatory for any Nigerian to receive power from the Disco or to use only public power, that is why it is not an offence for Nigerians to buy generators, inverters or solar systems which are of course more expensive than the power which NBET buys from the Gencos to vest to the Discos to distribute to customers.

“It is the Discos who are service providers that you should turn to when you have questions about transformer collapse and metering.

“As it is now obvious, from 2016 when the Discos complained about lack of power to distribute, the problem today is that the Discos cannot distribute all of the power that is available, leaving the sector with an unused capacity of 2,000 megawatts approximately.”

Although, he acknowledged the Discos alone could not be blamed for the failures of the sector, but suggested theirs were pretty obvious and most impactful.

“This is not a time to trade blame because there is enough blame to go round, for me, it is a time to reiterate everybody’s responsibilities and urge us to brace up to do what we are obliged to do, which is to serve the people.

“In the face of this picture, where we have power to sell, with more to come, the number of complaints coming to government for meters, which the Discos should supply, and for estimated billings, and mass disconnections when not everybody is owing cannot continue.

“Government must act, and will do so. The Discos bought these assets with their eyes opened, and they must compete to deliver or exit,” Fashola insisted.

He said small businesses need power but cannot get enough because of the Discos’ failure, just as he claimed that the investment of Gencos were threatened because they cannot utilise the capacity they have installed.

According to him, none of the Discos have an exclusive distribution licence and as such could not stop NERC from issuing new licences in the network areas they cover.

“Clearly, unless the Discos have a licence that is endorsed as exclusive, it is clear that no Disco has exclusivity over its franchise area.

“It is obvious that the law did not intend to replace government monopoly of PHCN in the power sector, with a private monopoly of businessmen.

“Whenever there is poor service, government, as a matter of policy and public interest is able and entitled to act and invite new players to fill the gap,” he added.

The minister also noted that it was not the intention of government to take over the business of Discos, adding that it wanted them to grow.

He however said: “In the period when they are not yet ready, willing, or able, life must go on and we must find solutions and substitutes as we have seen in other sectors.”

He noted that in line with the provision of Section 33 of the Electric Power Sector Reform Act (EPSRA) 2005, and Section 32 (2) (a)-(g) of the same Act which specifies the functions of NERC, he was directing the NERC to step up its regulation of the businesses of the Discos.

According to him “It is clear that a combined reading of these provisions show that it is necessary to direct NERC to step in to: Ensure that Discos improve on their distribution equipment and capacity to take up the available 2,000MW in order to optimise the use of the electrical resource produced by the Gencos, and I direct NERC to immediately act in this regard.

“Enforce the contract of Discos to supply meters and act to ensure the urgent speedy supply and installation of meters with a view to eliminating estimated billing and promote efficient industry and market structures.

“Stop Discos from threatening private entrepreneurs from entering the market to supply consumers whom the Discos cannot supply and to license such persons subject to terms and conditions in order to ‘promote competition and private sector participation’ and avoid a private monopoly of power.

“Section 71(6) dealing with Terms and Conditions of licenses clearly shows that no exclusivity or monopoly was intended for a license holder such as Gencos or Discos. To the best of my knowledge, the commission has not issued any exclusive license.”

He stated that: “If we take into consideration that after five years of privatisation, there are still people and businesses who do not have power or enough power, common sense and public interest demands that we must not resist ordinary people, small businesses like shops and markets from seeking alternative sources of energy. For now, our developmental needs cannot wait for businessmen who are not yet ready to serve.

“National interest, public good, the need to support small business, provide access to power for ordinary people and increase productivity inform the policy statements that I have made and I expect NERC to act with dispatch.”