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GENCOs, DISCOs disagree over planned centralisation of account

By Ediri Ejoh

The Electricity Generation Companies, GENCOs, and Electricity Distribution Companies, DISCOs, have disagreed over the plan of the government to centralise the accounts of the DISCOs aimed at achieving increased efficiency and accountability.

While the DISCOs have kicked against the move, calling it an act of sabotage to power investors and nationalisation of the 11 DISCOs, the GENCOs said the plan was a bold step in the right direction.

Recall that the Federal Government had, couple of months ago, threatened to centralize the accounts of the DISCOs over their inability to meet up monthly remittances.

The throwbacks also had the Nigerian Bulk Electricity Trading Plc, NBET, repeatedly challenging the DISCOs of remitting only 30 per cent of their monthly energy invoices last year.

But the DISCOs argued that the tariffs paid by customers were not cost-reflective for them to recover the actual cost of power distribution and remit to NBET.

The Executive Secretary, Association of Power Generation Companies, Dr. Joy Ogaji, explained in an exclusive chat with Sweetcrude that the alleged insincerity of the operators at the distribution arm of the power sector had discouraged  viable investors from investing in the generation arm, adding that the move to centralize their accounts could never had come at a better time than now.

According to her, “The move would send positive and promising signals to potential investors as well as generation licensed investors, who are yet to commence construction of generation plants.’’

She stated that the initiative would prove to such investors that the current administration is ready to make the sector viable and sees power sector as its top priority and a strategic route to the newly inaugurated economic recovery plan.

She argued that, “If centralising the payment system is tantamount to nationalising, the question that comes to mind is, what does selling the electricity and keeping the money all to oneself mean? If DISCOs claim they are not collecting enough, then they should open their books to make it plain for all to see and confirm their story. He who asserts must prove.”

Ogaji, described the move as one which would bring about transparency in the market adding that it would bring about better performance in the electricity value chain which in turn would raise sustainable cash flow for all market participants and reduce tariffs.

She maintained that the poor remittance of funds by the DISCOs has prevented the rest of the electricity value-chain from meeting up with their operations and service their liabilities which include gas payments.

She added that the supply sector of the industry, can no longer perform required and scheduled maintenance as well as pay for gas supply, stressing that “the need to monitor the flow of market funds has become necessary as this will enable transparency in the market and also give the regulator the ability to identify issues that will progress the sector and act accordingly in advising the government and stakeholders where funds actually needs to be pushed into in order to bring about self-sustenance and competitiveness.”

The Ibadan Electricity Distribution Company, IBEDC, has challenged government on the centralizing of accounts, saying, “We are not afraid to show our books at IBEDC. Every year since inception we are audited by NERC (Nigeria Electricity Regulatory Commission) and BPE (Bureau of Public Enterprises).”

Speaking to Sweetcrude on the implication if DISCOs accounts are centralised, the management of IBEDC, argued that the move portrays “that the government has taken over the business and they should refund the purchase cost to investors.”

On open market to purchase power directly from the GENCOs, IBEDC, explained that, “We are totally committed to ensuring improvement in power supply to our customers and also acknowledge the determination of the Honourable Minister of Power, Works and Housing to developing the sector. However, before the implementation of this kind of directive the market must become competitive in terms of all parts of the electricity value-chain operating under same conditions.

“This is not the case now, as we have the GENCOs billing in USDollar, while the DISCOs bill in Naira even though 99per cent of our cost is denominated in USDollar. Other conditions need to be clarified like infrastructure needs carriage costs etc.?

“It’s a win-loss situation, customers with loads higher than 2MHW can come together in a cluster and get power supply from the nearest GENCO, tariffs will go up to cover the loss of revenue that will be occasioned by the exit of DISCOs’ premium customers, collection losses could rise by as much as 20-25 percent.”

“On the win side there will be more power for residential customers, however the question of whether all residential customers will be willing to pay correct bills is still very valid, going by current happenings. Generally, we estimate that this is capable of causing a lot of disruption within the system,” they added.

Meanwhile, Electricity supply in the country for the month of May witnessed an unstable flow in generation to between 3,500Megawatts (MW) and 4,500MW.


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