Coming at a time that the Presidential Villa is being served a disconnection order, the federal government has earmarked about N40 billion in the 2024 appropriation to pay a part of the debt if the entire provision is released.
The legacy debt of the FG to the 11 distribution companies (DisCos) has been a serious challenge, adding to the liquidity crisis in the electricity sector. But for many years, no decisive action has been taken by the government.
On Monday, Abuja Electricity Distribution Company (AEDC) issued a 10-day notice to 86 government MDAs to pay up a debt of N47.1 billion in electricity bills or risk disconnection. The Aso Rock, according to the utility company, also owes about N1 billion.
The situation, which is adding to the inefficiency and losses in the system is coming at a time when the Nigerian Electricity Regulatory Commission (NERC) is on the verge of implementing the 2024 Multi-Year Tariff Order, which is expected to increase tariffs by over two times of the current prices.
Most DisCos, jostling to meet NERC’s minimum remittance order and avoid sanctions, are being forced to hound consumers who pay more through estimated bills, rather than recovering outstanding debts from government agencies.
In the push to evade sanctions, NERC had said DisCos had over-billed customers, especially those under estimated billing, by a whopping N105 billion even as the regulator imposed a fine of N10.5 billion to enforce transparent and accountable billing standards.
The dismal revenue collection and remittances in the market have already led to over N2.6 trillion in debts to gas suppliers and generation companies, who are relying on the revenue for survival.
The development, according to many stakeholders, is sabotage and failure to respect extant regulations.
With a series of cases of harassment against electricity workers, the military, ministries and paramilitary agencies, such as the Nigeria Army and the Police Force have been accused of leading government agencies with outstanding bills.
A stakeholder, Habeeb Jaiyeola, underscores the potential negative repercussions on the power sector if both government and private sector customers fail to settle their bills promptly.
He emphasizes the crucial role of prepaid meters for DisCos and urges collaborative efforts among stakeholders to ensure the long-term sustainability of the sector.
Jaiyeola highlights the far-reaching adverse effects of unpaid bills, pointing out how it hampers DisCos’ liquidity and, consequently, their ability to settle payments to other sector players. This, in turn, creates a ripple effect impacting the liquidity of generation companies and TCN.
A legal practitioner, Madaki Ameh, stresses the persistent hindrance caused by outstanding electricity bills to the nation’s power sector, even post-privatization and the introduction of prepaid meters.
He urges DisCos to deploy effective strategies for recovering overdue charges, while also calling on government agencies to adopt energy efficiency tools to manage their power costs more efficiently.
