N50bn debt owed by Discos cripples power sector

N50bn debt owed by Discos cripples power sector

The over N50bn debt owed the owners of the National Integrated Power Project
plants by 11 electricity distribution companies has become a heavy burden
threatening the power supply industry in the country, investigation has shown.
Our correspondent learnt that six NIPP plants being run by the Niger Delta Power
Holding Company Limited were groaning under huge debts of power sold to the
distribution companies but had not being paid for.
It was also learnt that other power generating companies that were carved out of
the defunct Power Holding Company of Nigeria were also weighed down by huge
debts owed by the distribution companies. The amount owed to the rest of the
generating companies could not be ascertained as of press time.
Our correspondent gathered that as of the end of January, the distribution
companies had accumulated a total debt of over N50bn for power generated by
the six NIPP plants and sold to them by the NDPHC.
It was also learnt that the bills for power generated and sold to the distribution
companies for the month of February were still being verified by the relevant
parties. This is expected to increase the volume of the debt when the verification
is completed.
The six plants are said to be responsible for the generation of between 40 and 45
per cent of the power currently put on the national grid.
The spokesperson for the NDPHC, Mr. Yakubu Lawal, who spoke to our
correspondent on the telephone, confirmed that the company was owed huge
debts by the Discos but declined to give details.
“Yes, the Discos owe us huge debts. If we have the money they owe us, we will
be comfortable. It will strengthen our operations,” he said.
In the absence of a defined timeline for the payment of the debt, Lawal expressed
hope that the company would receive a substantial part of the recent power
intervention fund announced by the Central Bank of Nigeria.
Eighteen electricity firms were carved out of the defunct PHCN as part of the
process to reform the electricity industry. These include the Transmission
Company of Nigeria, 11 distribution companies based on geographical coverage,
and six generation companies.
For the Abuja Distribution Company, Kann Consortium had emerged as the core
investor; the Benin Disco, Vigeo Power Consortium; Eko Disco, West Power and
Gas; Enugu Disco, Interstate Electrics Limited; while for the Ibadan Disco,
Integrated Energy Distribution and Marketing Limited emerged as the core
investor.
The EDC/KEPCO Consortium emerged the core investor in the Ikeja Disco; Aura
Energy Limited for Jos Disco; Sahelian Power Limited for Kano Disco; 4Power
Consortium for Port Harcourt Disco; while Integrated Energy Distribution and
Marketing Limited emerged for the Yola Disco.
For the power generation companies, North-South Power Limited emerged for
Shiroro Hydro Power Plc; Mainstream Energy Solutions emerged for Kainji Hydro
Power Plc: CMEC/EURAFRIC Energy Limited won the bid for Sapele Power Plc;
Amperion Power Distribution Limited emerged for Geregu Power Plc; while the
Transcorp Consortium emerged as the core investor in Ughelli Power Plc.
Most of the electricity generation and distribution companies were handed over to
the core investors in November 2013 after they paid the bid prices. However, a
greater majority of the firms have been held down by poor financing as the core
investors are still repaying the funds they borrowed from banks for the acquisition
of the power assets.
Among the successor companies, it is the Discos that have interface with the
consumers who pay electricity bills on monthly basis. The Discos purchase power
from the generating companies for which they are expected to pay at the end of
the month.
To boost their revenue base, most of the Discos have been increasing the
monthly tariffs charged customers without reference to the Nigerian Electricity
Regulatory Commission.
With estimated billing, many consumers have been complaining of arbitrary
charges.