Power Gencos Reject Discos’ Demand for Sector-wide Forensic Audit

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  •  Want electricity distributors to stop cash collections

Chineme Okafor in Abuja

Power generation companies (Gencos) monday faulted the demand by electricity distribution companies (Discos) for an all-inclusive forensic audit of the power sector.

The Gencos explained that the Discos were the only revenue-receiving arm of the sector and as such could not request that other players be audited.

They spoke through their trade association – the Association of Power Generating Companies (APGC).
The Executive Secretary of APGC, Dr. Joy Ogaji, stated in a note exchanged with THISDAY that a system stress test, not forensic audit, should be requested by the Discos.

The Discos had called for an all-inclusive forensic audit as a condition to guarantee their participation in a planned audit of their operations by the federal government and the World Bank.

This also came at a time that the Gencos may have recommended to the Nigerian Electricity Regulatory Commission (NERC) to disband the practice of cash collection and multiple payment accounts by the Discos.

The Gencos in a document THISDAY obtained, asked the NERC to institute a uniform payment platform to track the industry’s revenue inflow.

However, Ogaji in response to the Discos, said: “Discos’ call for a sector-wide forensic audit is laughable; they collect and keep the market’s monies. The Gencos don’t do that, so why do they ask for everyone to be involved in the planned forensic audit?”

“Forensic audit is about financial propriety, not operational activities. What are they afraid of? Why are they in court to stop the process?

“If they call for a system stress test, to show the capacities of each participants in the market, then it is understandable. In fact, that is what the sector needs now. Let the Gencos, Discos and TCN show the capacities they all claim to have. How can you forensically audit me when I don’t collect market money?”

But to engender a transparent business environment that facilitates and supports NERC’s regulatory oversight functions, the Gencos recommended the development of a platform for financial performance benchmarking.
They explained that a proposed platform – Revenue Stream Audit Paradigm (TRAP), would be a methodology that would ensure, in the first instance, that multiple revenue accounting by the Discos is eliminated.

TRAP, according to the Gencos, will equally seek to benchmark energy delivered against revenue collected as a measurement of revenue collection efficiency of the Discos.

“This ostensibly will enable a locked-step approach, from a tariff perspective, towards the determination of revenue requirements for the Discos. TRAP, therefore, seeks to institutionalise transparency as a core paradigm in Disco revenue accounting and reporting. TRAP also presents an opportunity for the development of a national e-payment portal through which customers can pay for services online.

“Currently, the Discos utilise multiple payment platforms for services, including payment for energy consumed. This has resulted in the creation of multiple accounting streams for the different payment channels. This presents a loophole for unscrupulous operators to divert and hence under-report revenue inflows,” the Gencos stated.

They said some of the identified payment channels operated by most of the Discos included analogue meter bill cash payments through the Disco cash offices, analogue meter bill cash payments through designated banks, estimated bill cash payment through the Disco cash offices, estimated bill cash payments through designated banks, online payments and pre-payment meter token cash payments through the Disco vending stations.

“It is estimated that about 60 per cent of all revenues by the Discos is through direct cash payments by customers. These payments are thereafter lodged into dedicated accounts as may be determined by the Discos. It is, therefore, the prerogative of the Discos to declare the extent of account holding in any of the banks.

“To eliminate this seeming loophole, TRAP will ensure that all payments for electricity usage shall be through the banks only – a specialised teller payment system to be institutionalised for all categories of customers, all existing bank accounts held by the Discos to be closed.

“All Discos to open TRAP-dedicated accounts in all the banks, no Disco shall be permitted to receive cash payments or lodge same by itself into any of the banks
“All commercial banks to be status-barred from receiving payments int
o or operating any other form of account holding for the Discos other than the approved TRAP accounts. Bank tellers to be situated in all hitherto Disco cash collection points. Accounting at these points will henceforth be through a teller system,” the document noted.