Outstanding debts, Govt. agencies’ refusal to settle electricity bills, obstacles to infrastructural development

EnergyDay Editorial Board

Recently, the Senate Committee on Privatisation and Commercialization led by the former governor of Abia State, Theodore Orji, visited Lagos state to get a first hand experience of the performance of privatized companies in the Nigerian Electricity Supply Industry (NESI).

What appeared to be the similar position posited by the privatized firm visited by the Committee was the quest for the legislators to help resolve the looming crisis of outstanding debts to the industry operators.

At the team’s first point of call, the Managing Director, Eko Electricity Distribution Company (EKEDC), Mr Adeoye Fadeyibi, urged the National Assembly to intervene in the repayment of the N21 billion outstanding debt owed the DisCo by Ministries, Departments and Agencies (MDAs).

The situation was no different at the Ikeja Electriticity Distribution Company (Ikeja Electric) as the company’s chief marketing officer, Ugo Obi-Chukwu, said the company was being owed a total of N70.97 billion by its customers with bulk of the sum attributed to MDAs.
Management of Egbin Power Plc, a power generation firm towed the same line of demand while hosting the August visitors.

According to the Group Managing Director, Sahara Power Group, (owner of Egbin Power), Mr Kola Adesina, the firm is currently being owed N388 billion by the Nigerian Bulk Electricity Trading Plc, the government owned company is responsible for making payment for electricity supply to distribution companies for onward transmission to their customers. Thus, from the generation to the distribution arms of the industry, the common dominating challenge is unsettled debts.

However, what seems disturbing is the dominance of government agencies in this regard. Unfortunately, the wider implications of such action which remain unabated even in the post privatization era is catastrophic to say the least.

First, it raises the question of government’s morality in asking the ordinary citizens to settle their electricity bills when they don’t lead by example.

Secondly, it gives room for concern over the sincerity of government determination to salvage the industry from its final predicament. Worst still, when government is a part owner of the business. The question is was the privatization exercise programmed to fail from inception?

Finally, it questions the rationale behind government’s continued intervention in the form of release of funds to the sector under various types of grants.

The implication is the absence of much expected growth and transformation hoped for at the point of transferring ownership of the sector from government to private sector in 2013.
Perhaps, the lack of Infrastructural development in the sector, especially by the distribution companies (DisCos) can be blamed on this situation. Knowing fully well that government agencies are their largest debtors, the DisCos are encouraged to forsake the key function of expanding their infrastructure to capture the ever increasing demand for the product.

When they are compelled to do so, as as the case of meter provision, the DisCos will wait for an intervention scheme from the government. Unfortunately, while the DisCos who interface with the consumers and collect revenue on behalf of other operators in the industry, use the outstanding debts, Capital Expenditure (CAPEX) and other loopholes in the system as alibi to deprive the system of funds, they (DisCos) equally refuse to invest in infrastructure.

While we at EnergyDay, agree that MDAs refusal to pay for the electricity they consume is as appalling as it is nauseating, the situation offers a window into a growing malady in respect of the way MDAs work at cross purposes, clocking the wheels of a drive towards accountability, transparency and efficiency.

We recall similar disclosures at the tail end of 2019 when it was stated that the federal government’s indebtedness to the power distribution companies (DisCos) in terms of tariff shortfall was a total of N1.728 trillion as at December 31, 2019, according to the Association of Nigerian Electricity Distributors (ANED). At that time, the association put the total amount of debts MDAs were owing the DisCos as at December 31, 2019, at N116.487 billion.

ANED’s breakdown of the debts the MDAs owed the Discos showed that while the Abuja Distribution Company, which covers Niger, FCT, Nassarawa, and Kogi was owed a total of N16.132 billion as of last December; Benin Distribution Company, which covers Delta, Edo, Ondo and Ekiti States was being owed a total of N6.168 billion; Eko Distribution Company, which covers Lagos, Ogun, and Agbara, was indebted to the tune of N20.874 billion, and the Enugu Distribution Company, that covers Abia, Ebonyi, Enugu, Anambra and Imo States was also being owed a total N7.034 billion as of December last year.

At the time, MDAs were owing the Ibadan Distribution Company, that covers Kwara, Oyo, Osun, and Ogun, a total of N8.795 billion; Ikeja Disco – N7.965 billion; Jos Disco – N10.924 billion; Kaduna Disco – N21.849 billion; Kano Disco – N5.645 billion, and Port Harcourt Disco, a total of N11.101 billion.

However, the Orji-led Senate Committee’s visit is important for many reasons. One, this medium is in the dark as to how it would take a visit for the committee responsible for such oversights to get to know the challenge facing organisations and agencies it is supposed to maintain oversights over.

This is a gross dereliction of responsibility, which shows lack of rigour in the execution of oversights function.

It is fitting that Mr. Orji said the visit of the committee was in line with its statutory responsibility to oversight privatized entities for better performances. But beyond such rhetoric, such committees should in future exhibit better bonding and strong oversights from time to time, at least for the purpose of settling these debts that seems to be weighing negatively on the sector growth.

EnergyDay urges the National Assembly to find a way of making the MDAs to show more responsibility by paying up their indebtedness to DisCos.

But perhaps the more critical question is how ordinarily are the DisCos ready to pick up the challenge of expanding their inherited and dilapidated infrastructure in order to provide their willing and committed customers with regular electricity?

Interestingly, the 11 Electricity DisCos across Nigeria are quick to attribute their fragrant disregard to consumers demand for better service offers to poor revenue collection, they are usually silent as to how they can improve the system with what they have got.

For instance, the DisCos reported a shortfall of N273.42 billion in terms of expected revenue earnings for 2020, saying they received a total of N542.73 billion out of N816. 15 billion they billed their consumers during the year. However, the said amount is an increase of N42.46 billion from the total of N230.96 billion shortfall recorded in 2019.

Findings also revealed that the amount the DisCos generated from their consumers in 2020 increased by N55.49 billion from the N487.24 billion recorded in 2019. This revelation was made by the National Electricity Regulatory Commission (NERC) in its 2020 financial report.

NERC further revealed that Ikeja Disco led the pack raking the highest amount of electricity bill from customers. It received N105.23 billion in 2020. Yola Disco, however, received the lowest revenue in the year under review. It got N10.74 billion during the period.

Eko DisCo made revenue of N84.7 billion, followed by Abuja DisCo with N82.6 billion. Ibadan DisCo also recorded N61.8 billion within the period under review.

Enugu DisCo recorded revenue of N47.83 billion while Benin and Jos DisCos received N45.66 billion and N17.44 billion respectively. Kaduna, Kano and Port Harcourt DisCos got N21.53 billion, N33.84 billion and N31.4 billion respectively from their electricity consumers.

At EnergyDay, we are miffed that in spite of the enormous revenues generated by the 11 DISCO , we are yet to see solid achievements attributed to them in terms of infrastructural upgrade, renewals, optimal metering, better customers’ relations among other indices of growth. It is disturbing that less than 50 percent of households are yet to be given prepaid meters.

The NERC recently disclosed that metering for customers has been a challenge so far, citing that only Eko Electricity Distribution Company and Ikeja Electric Plc had metered over 50% of their customers.

There is nothing on ground to justify the huge revenues the 11 distribution companies have been collecting since their privatizations. What have they been doing with the huge revenues? We insist that going forward they must do the needful in terms of Infrastructure being put in place in form of replacing outdated poles, wires and transformers.

It is on record that part of the reason for rising electricity thefts is the frustrations experienced by customers who have contributed money to buy transformers and other electricity assets only for the DISCOS not reimbursing them.

Going forward, DISCOS must change their attitude and do the needful.