Electricity distribution companies (DISCOs) on Tuesday accused the power ministry of being more interested in awarding “over-priced, misguided contracts” than bridge the over N1.3 trillion tariff gap in the industry
The Association of Electricity Distributors Investors and the Association of Nigerian Electricity Distributors (ANED) in a joint media briefing accused government of reneging on all its performance agreement signed in 2013.
Executive Director, Research and Advocacy of ANED, Sunday Oduntan, said following the privatisation of the power sector, the federal government promised to ensure a tariff regime that covered production cost as well as a debt-free financial book.
He said government also promised to settle the debts by the ministries, departments and agencies (MDAs), apart from paying N100 billion in subsidy for two years, to cater for the poor state of infrastructure in the industry.
On the other hand, Mr Oduntan said the DISCOs agreed to supply 1.7 million meters in five years; increase customer connection; improve customer service; reduction in power interruption and aggregate technical/ commercial losses as well as extension of distribution network.
For government, he said, none of the promises has been kept till today, except the N29 billion it paid last year for the military’s debt, leaving over N70 billion unsettled till date.
He said the DISCOs have delivered 88 per cent of their promise to supply meters, despite a huge metering gap of over 4.1 million they met on taking over.
The ANED scribe gave the tariff gap between what the government specified as the price of electricity that DISCOs could retail/distribute and the true cost of the commodity to be in excess of N1.3 trillion.
Describing the tariff gap as a fundamental problem in the industry, he said although the DISCOs were not advocating for an increase in tariff to the consumers, there was need for the gap to be fixed.
“The DISCOs are carrying on their financial books an impediment to both the sustainability of the electricity market and the ability of the investors to meet the obligations of their Performance Agreement with the government.
“This should result in the improved metering, customer service, increased customer connections that electricity consumers demand and deserve. This gap remains unaddressed by the government,” Mr Oduntan said.
He said the DISCOs are compelled to believe that they were being deliberately held down by government to be unable to deliver on their mandate to the industry.
The distribution companies accused the power ministry of paying more attention to awarding contracts than to the need to bridge the tariff gap in the industry.
Instead of funding the tariff gap, the DISCOs said, about $350 million from the World Bank to the Rural Electricity Agency (REA) was used by the ministry to implement projects that are not only “exorbitant and over-priced, but also “do not make sense.”
They cited the example of such projects to include the solar-powered project in Effurun, Warri, in Delta State and a gas-powered electricity project in Ile-Ife, in an area without access to gas, but replete with lots of solar energy.
In addition, they said about N78 billion was included in the budget for “distribution” projects to be executed by the Transmission Company of Nigeria (TCN) for the DISCOs.
“It is clear some people are more interested in awarding contracts than putting the nation first and doing what is best to bring electricity to Nigerian homes,” the DISCOs alleged.
Despite payment of about $1.4 billion (about N427 billion) by DISCO investors for the distribution assets, they said their members were yet to have any return on their investment after the five-year performance period.
Although they reaffirmed their commitment to meet the terms of the performance agreement they signed as well as improve service delivery, the DISCOs said meeting these commitments would be impossible without government addressing the tariff gap.
When contacted for a reaction to the allegations by the DISCOs, Hakeem Bello, the spokesperson of the Minister of Power, Works and Housing, Babatunde Fashola, said there were nothing new about what the DISCOs said.
Mr Bello said the minister had in recent fora recently addressed all the issues, adding that any of the DISCOs that wanted to quit should know the due process to follow was not to issue threats through the media.
It was reported that Mr Fashola repeatedly warned the electricity distributors to improve their services or leave the business.
Many Nigerians have complained about the actions of the DISCOS especially the non-provision of pre-paid meters, and the use of estimated billings.
Mr Fashola also criticised Mr Oduntan and ANED.
“If ANED is not a licensee, who is ANED ? An NGO? If so, they should listen to consumers because Nothing is Going On about poor service,” the minister wrote a fortnight ago.