Journalism of Courage

DisCos slam Power Minister for taunting 13, 000MW as current generation capacity


…says it’s out of this world but imaginative, untrue

The 13,000 megawatts of electricity generation taunted by the Minister of Power, Mamman Saleh, has been rejected as untrue, imaginative and incredible by major stakeholders in the nation’s power sector.


The Association of Nigeria Electricity Distributors (ANED), in its first reaction to the minister’s claim at a media briefing, also debunked the claim that Nigeria now transmits 7,000 to DisCos while the distribution companies only distribute 3,000 megawatts to end users, saying it amounts to fantasizing.


Contrary to the figure reeled out by the minister, ANED which is the umbrella body for the DisCos,  said the TCN only wheels a mere 4,303MW supplied to consumers.


Saleh had told newsmen last week in Abuja: “Nigeria currently generates 13,000 MW of electricity; it transmits 7,000 to DisCos while the distribution companies can only distribute 3,000 megawatts to end users.”


He also blamed the poor power supply across the country on the Discos.


But ANED which has as its CEO, Mr Azu Obiaya, absolved its members of any blame, saying the quantum of power that DisCos supply to their customers is based on the allocation they get from the TCN.


Persecondnews reports that members of the Board of Trustees of ANED include Mrs Olufunke Osibodu (Benin Disco), Mr Ernest Oji (Eko Disco), Mr Yusus Hamisu (Kano Disco) and Mr Ernest Mupwaya (Abuja Disco).


The body referred the minister to a review of the daily Power Report published by TCN’s National Control Centre (NCC) in Osogbo, Osun State, which clearly indicates that the peak generation ever recorded in Nigeria is 5,375 MW out of which only 4,303 MW of energy is wheeled or transmitted by the TCN to DisCos.


“Historically, TCN has never wheeled or transmitted energy above 4,557 MW nor matched its transmission to any of the generation peaks to date.


“As such, references to TCN’s ability to transmitting “…7,000 to Discos…” is inaccurate and misleading. TCN’s attestations of a transmission capacity of 8,100 MW is based on nothing more than a computer simulation and not tested, proven or practical capacity,’’ the DisCos said in a statement by Barr. Sunday Oduntan, the Executive Director, Research and Advocacy of ANED.


On the claims that DisCos have received billions as subsidy from the Federal Government, ANED said its members had not received a “kobo’’ till date.


Rather, it said the Ministries, Departments and Agencies (MDA) are owing them N100 billion while DisCos liabilities to the Nigerian Electricity Supply Industry (NESI) is N81 billion.


ANED declared: “That is what we are saying. Government cannot continue to subsidise because what they are doing is that they collect 3,000 megawatts and pay for only 1,000 megawatts.


“That is 15 percent of what they are collecting. So, government is the one completing the payment.” To date, the DisCos have not received any subsidy from the federal government.


“References to the N1.7 trillion in subsidies paid by the government are associated with payments that have been made to the generating and gas supply companies, under the Payment Assurance Guarantees (PAG) initiative and the Nigerian Electricity Market Stabilization Fund (NEMSF).


“PAG is, principally, a result of government regulatory and policy interventionist initiatives that have resulted in the inability of the NESI value chain to recover the cost of doing business based, primarily, on tariffs that are non-cost reflective – an unmet critical commitment of the privatisation of the electricity distribution companies.


“As a matter of fact, NERC’s December 2019 Minor Review Order specifies federal government debt to the DisCos (correspondingly, the rest of the NESI value chain), due to tariff shortfalls, of N1.728 trillion. DisCo’s liability to NESI, due to market shortfalls, is N81 billion.


“Significantly, government Ministries, Departments and Agencies (MDA) owe the DisCos in excess of N100 billion, for energy consumed but not paid for – a federal government commitment, yet again, unmet under the privatisation agreement and MYTO-2015.’’


On the liabilities of the DisCos, ANED pointed out” “Unfortunately, these liabilities now constitute an encumbrance on the DisCos’ financial books, limiting or precluding their ability to access the financing that is critical for capital investment and injection of efficiency in the distribution of electricity.


“This is another violation of a privatisation commitment which required that the DisCos have debt-free financial books that would enable them access debt funding for their operations.


“A review of DisCo performance would indicate that the DisCos have improved their collection efficiency, from 2017 (57.89%) to a high of 74.5% (Quarter 4, 2019), in spite of the issues of lack of access to financing and the related limited capital investment, as well the artificially suppressed electricity tariff.’’


On the purported takeover of power supply by the Federal Government from DisCos and hand them over to a German firm – Siemens, the stakeholders said the proposal had promoted a perception that the Nigerian government does not respect sanctity of contract, a requirement for any investment in the country – particularly, for the cheap foreign capital that is required for the massive capital expenditure needs of NESI.


ANED stated: “A related note is the greater uncertainty associated with threats of renationalization and reversal of privatisation objectives. The DisCo investors have executed agreements with the Bureau for Public Enterprises (BPE), the federal government’s representative agency under the privatisation.


“These agreements specify the terms and conditions under which both parties shall accomplish the objectives of the privatisation, as well as a framework of commitments necessary for the DisCos to achieve their performance targets. Unfortunately, as indicated above, the commitments of the government remain unmet.


“As such, we believe that the focus should be on how to utilize the agreement’s remedial framework to address the deficiencies that currently exist in the electricity distribution sub-sector, rather than the adoption of kneejerk initiatives that send signals that would result in potential adverse outcomes for the larger Nigerian economy.


“Siemens is an electricity equipment manufacturer and not a utility operator. Seeking to hand the DisCos to Siemens is akin to asking the pharmaceutical drug manufacturer to treat the patient as a doctor.’’


Pointing out that the DisCos’ majority shareholders are mostly Nigerian investors funded by Nigerian banks, any wrong decision about takeover would send a wrong signal to the outside world that Nigeria is closed for business to local investors.


“This will encourage capital flight and killing home-grown solutions to our economic problems.’’

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