Friday, November 8

State of Electricity: Fashola Urges GENCOs, DISCOs, Stakeholders to Brace Up to Serve Nigerians

  • I’m being inundated with daily reports by text, e-mails and letters of “exhorbitant” bills by Discos to consumers without meters, but remittance to NBET not increasing.

By Dele Ogbodo

The Minister of Power, Works and Housing, Mr. Babatunde Fashola SAN, has said urged Power Generation Companies (GENCOs), the Distribution Companies (DISCOs), the Nigerian Electricity Regulatory Commission (NERC), the Transmission Company of Nigeria (TCN) and all other stakeholders in the electricity supply chain to brace up to serve Nigerians.

Having acknowledged the various challenges and progress made in the sector, he however said that the time that we are in is not to trade blames, adding: It is a time to reiterate everybody’s responsibility and to brace up, to do what we are obliged to do, which is to serve the people.”

Fashola made the disclosure during an interactive with the ministry’s heads of agencies and the media in his office on Monday in Abuja on the state of play, steps and policy direction of the ministry.

According to him, most Nigerians are still struggling to understanding the organizational and operational structure of the power sector after privatization, an understanding of who to turn to when service is not good, he added.

The minister said it is interesting to know that no DISCO buys power directly from the GENCO for reasons only known to them, he added.

He said: “They are content to allow the government bulk trader pay the GENCO for the power and receive it under the vesting contract which they are not properly performing because they remit only about 15 percent to 20 percent of the power they receive, and have accumulated debts of about N859 billion owed to NBET.

“Interestingly, he stressed that the Act does not make it mandatory for any Nigerian to receive power only from the DISCO or to use only public power. That is why it is not an offence for Nigerians to buy generators, inverters or solar systems which are, of course, more expensive than the power which NBET buys from the GENCOs and vests in the DISCOs to distribute to consumers. On who to turn to when you have no meter, no supply of power, or your transformer is bad; it is the Discos, who are the service providers, that you should turn to. They are the ones who bill you and collect money from you.”

I must of course point out that, from time to time, there are failures in the system such as gas supply shortage or transmission failures. However, when there are occasional cases of lack of gas supply to power transmission, the DISCOs cannot be held responsible, adding that any fair-minded observer will admit that this does not happen every day and this has nothing to do with supply of meters or the proliferation of estimated bills.

On achievements, he explains: “Generation of power has improved from 4,000 MW in 2015 to 7,000 MW in 2018 averaging an increase of 1,000 MW yearly and we expect to add 455 MW (Azura); 215 megawatts (Kaduna), 240 MW (Afam III); 40 MW (Kashimbilla); almost a total of 954 MW in 2018; and 700 MW (Zubgeru) 480 MW (Okpai II) about 1,150 MW projected for 2019, and the GENCOs are undertaking various repairs, rehabilitation and expansion that will bring on incremental power.

“Transmission has increased from 5,000 MW in 2015 to 7,124 MW in December 2017 averaging 1,062 MW per annum increase in transmission capacity. TCN currently has about 90 Transmission projects in various stages of construction and many are to be completed this year. So, we can transport what the GENCOS generate and there is a transmission expansion plan 2018 to 2028 which government is committed to implement. Distribution has increased from 2,690 MW (Approx) in 2015 to 5,222 MW in 2018, averaging an increase of 844 MW per annum because the DISCOS have also done some work.”

However, he said that it has become obvious, from 2016 when the DISCOs complained about lack of enough power to distribute, the problem today is that the DISCOs cannot distribute all of the Power that is available, leaving the sector with an unused capacity of 2,000 MW , with the approximately 1,150 MW projected to come this year and 2019.

Also on what government has done, he said, through the CBN, government has made available the sum of N213 billion to the power sector at concessionary interest rate below market rate to GENCOS and DISCOS.

Regrettably, Fashola said  because of the source of funds, conditions such as the opening of letters of credit were attached to secure performance of the purpose for which the money was meant,

stressing that: “Some DISCOS have not taken the money and instead have gone to court thereby frustrating full disbursement, and recently the NERC has revealed unauthorized use of the money by Ibadan DISCO and taken some regulatory actions. Government has responded to claims of debts owed by MDAs to DISCOs before this administration alleged to be in the region of upwards of over N70 billion.

“At the cost of government, several hundreds of thousands of bills were very painstakingly verified and government ascertained that N27 billion was owed by federal MDAs to DISCOS. The payment was by a set-off of this amount against the sum of N859 billion owed by DISCOs to NBET (a government agency) to reduce that debt.

“Prior to the tenure of this administration and during it, GENCOS and gas suppliers who produce the power were being underpaid by NBET because DISCOs were under collecting or under remitting, such that GENCOs were getting only about 20 percent of their invoices for power they generated.”

He went further to say that government created a N701 billion Payment Assurance Guarantee for NBET to ensure that payments to GENCOS improved and this has now increased to 80 percent payment on invoices, up from 20 percent, in the hope that with improved power production, DISCOs will collect and remit more.

According to him, NBET is also owing the GENCOs N325.784 billion which can be settled if NBET collects what the Discos are owing, explaining that some other institutions are owing the Discos and there are also individuals and corporations who are by-passing meters and stealing energy, adding these can would have been resolved if every stakeholder were doing the right thing.

“In order to assist in the evacuation of 2000 MW (the deficit between what the GENCOS can produce which is 7000 MW and what the DISCOs can distribute which is 5000 MW) the Government asked the DISCOs to submit their transformers and equipment requirements.

“As 40% shareholder, Government has committed to invest N72 Billion for procurement of equipment and installation to help get the 2,000 MW to consumers and this process has been advertised with encouraging responses from original equipment manufacturers, which are being evaluated.

“In order to bridge the metering gap, government has settled an inherited court case and is able to make available N37 billion to Meter Asset Providers (MAP) under regulations made by NERC to license meter entrepreneurs to help supply meters that the DISCOs are under contract to supply but are as yet unable to fully discharge. The regulations require DISCOs to contract with their MAPs in order to promote a harmonious relationship and reduce friction and disputes.

“In order to accelerate supply to industries and heavy consumers, Government, through my office, pursuant to powers conferred by Section 27 of the EPSRA declared eligible customer, which was to enable people who consumed 2MW and above, who were not getting power because of lack of distribution equipment, invest in the provision of the equipment and take power directly from GENCOs who had the power.

“The DISCOs initially resisted and are currently giving reluctant co-operation to a policy meant to supply power to people they cannot supply. All of you will remember of course that NERC, (not the Ministry of Power or the Minister, approved a tariff increase for the Sector.” He said.

 Fashola frowned at complaints directed at for meters, which the DISCOs should supply, and for estimated billings, and mass disconnections when not everybody is owing cannot continue, stressing that government must act, and will do so. The DISCOs bought these assets with their eyes opened, and they must compete to deliver or exit.

 On next line of action, he said it is not government’s intention to take over the business of DISCOs. On the contrary, it is Government’s desire to see DISCOs thrive and flourish in a competitive environment.

“In the period when they are not yet ready, willing, or able, life must go on and we must find solutions and substitutes as we have seen in other sectors. Therefore, pursuant to the provision of Section 33 of the EPSRA which provides that: 33 (1) The minister may issue general policy directions to the commission (NERC) on matters concerning electricity, including directions on overall system planning and co-ordination, which the commission shall take into consideration in discharging its functions under Section 32 (2) provided that such directions are not in conflict with this Act or the Constitution of the Federal Republic of Nigeria.” The Minister said.

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