DisCos need N8.7bn to meet NERC’s remittance order

  • Hints remittance order may lead salar payment
  • Asks MDAs to settle N100bn electricity debts

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The Electricity Distribution Companies (DisCos) have implored the National Assembly to intervene in the current liquidity crisis in the power sector, saying they will need N8.7 billion to comply with the remittance order set by the Nigerian Electricity Regulatory Commission (NERC).

A statement issued today by Sunday Oduntan, ANED’s executive director, research and advocacy, in a breakdown of the required amount, said the DisCos will require N725 million monthly to meet the threshold of 35 per cent remittance level set by NERC in the meantime.

“To meet the new remittance expectations, DisCos will have to finance an average gap of N725 million per month (about N8.7 billion per year), until increased collections bridge the gap,” the DisCos noted.

ANED in the statement said while the DisCos were expected to do a minimum remittance of N12.69 billionn (about 35.per cent) for the July 2019 billing cycle from a total N35.79 billionn invoice from the Nigerian Bulk Electricity Trading Plc (NBET), the DisCos actually remitted N8.06 billion.

The outstanding was N4.63 billion as the DisCos group said the eight DisCos performed up to 23 per cent of the 35 per cent required of them for the month.

Explaining the implication of injecting N725 million monthly to NERC’s expected remittance order, ANED told the Committee that the amount 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,” the statement said.

The association recalled that there was such protest at Kaduna DisCo last week by its staff for not meeting its salary and pension payment obligation.

It also explained the major causes of the liquidity crisis in the power sector. It said the Average Technical Commercial and Collection (ATC&C) losses have remained high due to lack of liquidity, un attractive investment terrain and customer apathy to pay bills.

ANED said the sector was losing money because of the lack of cost-reflective tariff and the non-payment of bills by the ministries, departments and agencies (MDAs).

The extensive regulatory changes, undelivered privatisation commitments and lack of adequate government guarantee on investments have discouraged prospective investors, the body lamented.

DisCo, ANED, electricity Tariff
Sunday Oduntan, ANED’s executive director, research and advocacy

On the part of customers, ANED said the lack of metering and over-estimated billing are key reasons for the mistrust by consumers and their unwillingness to pay their bills.

“The setting of remittance threshold is good for NESI. However, realistic levels and timelines for DisCos to ramp up is key for sustainable compliance,” ANED for further stated

While the DisCos said they await a cost-reflective tariff from NERC, they however said it takes time to increase collection level.

“Cost reflective tariffs do not attract immediate performance improvements. Expectations need to be managed by government – the Bureau of Public Enterprises (BPE) and NERC, the statement said.

ANED appealed to the Committee to intervene so that the current N600 billion federal government power sector intervention need to go beyond year 2020, “to cushion the effects of tariff hikes, allow investments to be injected by both TCN and DisCos, and to mitigate shortfalls to the Generation Companies (GenCos) and gas suppliers.”

It also asked that NERC should be made to amend the Remittance Order to ensure compliance and that the over N100 billion electricity debts owed by Ministries, Departments and Agencies (MDAs) should be taken off the energy bills NBET gives to the DisCos.