DisCos require N8.7 billion to bridge NERC remittance order
Electricity Distribution Companies (DisCos), yesterday, said about N8.7 billion will be required yearly to comply with the remittance order set by the Nigerian Electricity Regulatory Commission (NERC).
Calling the National Assembly to intervene in the current liquidity crisis in the power sector, Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors (ANED), Sunday Oduntan, said DisCos would need N725 million monthly to meet the remittance order.
NERC had threatened to revoke the licences of eight DisCos, including Abuja, Benin, Enugu; Ikeja, Kaduna, Kano, Port Harcourt, and Yola over breach of some provisions of the Electric Power Sector Reform Act in July 2019.
A notice issued to the DisCos reads in part: “pursuant to Section 74 of the EPSR Act, and the terms and conditions of
electricity distribution licences issued to the distribution licensees by Nigerian Electricity Regulatory Commission has reasonable cause to believe that the Discos listed below have breached the provisions of EPSRA terms and conditions of their respective distribution licences, and the 2016 – 2018 Minor Review of Multi Year Tariff Order and Minimum Remittance Order for the Year 2019.”
The Transmission Company of Nigeria (TCN), had earlier embarked on similar measure linked to financial liquidity, which had seen the disconnection of some power feeders of some of the DisCos.
Oduntan, however, said: “To meet the new remittance expectations, DisCos will have to finance an average gap of N725 million per month (estimated at N8.7 billion per year), until increased collections bridge the gap.”
According to him, while the DisCos were expected to do a minimum remittance of N12.69billion for the July 2019 billing cycle from a total N35.79billion invoice from the Nigerian Bulk Electricity Trading Plc (NBET), they actually remitted N8.06billion.
The DisCos were frequently accused of under remittance reportedly running into about N1.156trillion as of February this year; the utility providers blamed their inability to meet the 35 per cent threshold specified by NERC on the liquidity crisis in the power sector.
They noted that the Average Technical Commercial and Collection (ATC&C) losses have remained high due to lack of liquidity, unattractive investment terrain, and customer apathy to pay bills – a product of suspicion based on estimated billing and electricity theft.
Oduntan also said the situation has been compounded by the three years of delay in minor reviews, and non-payment of electricity bills by the Ministries, Departments and Agencies (MDAs).
“The establishment of remittance threshold is good for the Nigerian Electricity Supply Industry (NESI). However, realistic levels and timelines for DisCos to ramp up are key for sustainable compliance,” he said.
By implication, he added, injecting N725m monthly to NERC’s expected remittance order, requires revenue, in terms of operational and capital expenses already significantly far short of what is required, represents DisCos’ average monthly salaries.
“Compliance with NERC Order will impair this critical obligation to DisCos staff, which will create labour unrest, and reduce overall performance,” he said, urging lawmakers to intervene, especially to ensure that federal government N600billion power sector intervention goes beyond the year 2020.