Chineme Okafor in Abuja
The poor remittance levels of the 11 electricity distribution companies (Discos) in Nigeria’s privatised power market may have defeated the aim of the N701 billion bailout by the Central Bank of Nigeria (CBN) to the power generation companies and gas suppliers, THISDAY has learnt.
Following the declaration last week by the federal government through the Permanent Secretary, Ministry of Power, Mr. Louis Edozein, that the government might soon discontinue its payment of financial shortfalls to the Gencos, THISDAY gathered from the market records from the Nigerian Bulk Electricity Trading Plc (NBET) that the intentions of the bailout scheme may not be met after all.
From the analysis of the market records obtained Thursday in Abuja, the original intentions of the bailout funds was to support the Gencos to continue to produce electricity for at least two years when the Discos would be able to pay substantially for power sold to them.
However, there are strong indications that this objective may not be achieved because the Discos remit an average of 25.5 per cent monthly to the NBET for power sold to them as against 80 per cent remittance target by the end of 2018.
The development, it was learnt, means that the 80 per cent Discos remittance level the NBET anticipated at the end of the disbursement of the N701 billion in December 2018 would not be feasible.
The inability of the Discos to hit the 80 per cent remittance target in 2018 will also potentially weaken the capacity of NBET to repay the N701 billion in 10 years.
The NBET obtained the N701 billion facility from the CBN in 2017 to guarantee payments for electricity generated and supplied by power generation companies (Gencos).
The bailout was intended to bridge the payment shortfalls to Gencos and gas suppliers, and ultimately sustain electricity supply to Nigerians.
It was expected that at the end of the disbursement of the bailout between January 2017 and December 2018, the monthly remittances of the Discos for power supplied to them would have come up to 80 per cent.
But the market remittances indicated that on the average the Discos paid 25.5 per cent monthly, thus jeopardising the intention of the bailout.
At the time the NBET obtained the bailout for disbursement, it agreed to pay it back to the CBN within 10 years.
By the terms of the bailout, Discos would continue to remit an average of 25 per cent of its invoice to NBET throughout 2017, and thereafter gradually increase it over the course of 2018 to possibly 80 per cent.
But a data from NBET showed that in October 2018, the average energy received by Discos was 3,004.31 megawatts (MW), amounting to N47.609 billion but which the Discos paid NBET N11.575 billion, representing 24.31 per cent of the invoice for the month.
It also indicated that an average of 2,819.27MW was sold to the Discos in September and they paid NBET N12.51 billion for an invoice worth N43.32 billion which represents 28.88 per cent. In August, it was an average of 2,954.54MW for which the Discos paid NBET N10.287 billion for their invoice worth N46.28 billion which represents 22.23 per cent.
Further the average energy received by Discos in July was 2,892.08MW, for which the NBET received N13.47 billion for an invoices of N48.16 billion it sent to them and which represented 28 per cent remittance.
Again, in June, it was N12.52 billion paid for an average of 2,820.42MW of power sold to the Discos and which was worth N44.04 billion, thus representing a remittance level of 28.45 per cent.
For the months of May; April; March; February and January 2018, the market record stated that the average power supplied to the Discos was 2,986.84MW; 3,258.09MW; 3275.13MW; 3225.22MW; and 2,445.06MW, worth N45.94 billion; N47 billion; N48.03 billion; N44.44 billion; and 44.85 billion respectively, out of which they paid to NBET N14 billion or 26.44 per cent; N12.37 billion or 26.31 per cent; N12.21 billion or 25.43 per cent; N11.38 billion or 25.62 per cent; and N6.08 billion or 13.58 per cent.
Gencos through their association – the Association of Power Generation Companies (APGC), told THISDAY that irrespective of the situation, they would still demand full payment from the NBET for power supplied to it.
The APGC Executive Secretary, Dr. Joy Ogaji, stated in this regards that the Gencos have existing power purchase agreements with the NBET, which entitle them to full payment for power sold to it, and in which case, they would always make requests for full payments.
