Discos Disconnect Legacy Debtors

By Ejiofor Alike  


The nation’s power sector crisis deepened at the weekend following the mass disconnection of legacy debtors by all the electricity distribution companies (Discos) to protest the huge unpaid electricity bills by this class of consumers.

For now, all historic debtors, including residential, commercial, industrial and government establishments across the three tiers of government would have to find alternative means of electricity supply until this debt issue is resolved, said the Association of Nigerian Electricity Distributors (ANED).

As at the last calculation, the body revealed that government establishments, including the military and security agencies alone owed the Discos some N93 billion.

The figure, it said, comprised N39.1 billion pre-privatisation of electricity assets and N39.5 post-privatisation.

Also thrown into the debt calculation is the outstanding interest of N15 billion, which the Bulk Trader charges Discos for late payment of their electricity bills, which was worsened by the non-settlement of electricity bills by consumers as and when due.

Two weeks ago, all the Discos took pages in some national newspapers to issue all legacy debtors deadlines within which to pay their debts or have their electricity supply disconnected.

Mr. Sunday Oduntan, Executive Director of ANED, said at the weekend that his member-companies had to carry out its threat when it became “obvious that there was nothing on the table”.

He said: “Although we appreciate the efforts of Vice-President Yemi Osinbajo and the Minister of Power, Works and Housing, Mr. Babatunde Fashola, but the stark reality is that there is nothing concrete to hold on to.

“There is no provision for MDAs’ debts to Discos in the budget, even though we started discussions before the budget was passed. The indebtedness has become so huge that we are truly troubled about how the government would resolve this without a budgetary allocation.”

Oduntan, however, made it clear that the current mass disconnection protest embarked upon by Discos was not an exercise targeted at MDAs, “but all legacy debtors”.

“Our position is that this indebtedness is killing us; it is seriously impacting negatively on the entire value chain in the power sector equation. Don’t forget that only 25 per cent of this debt actually belongs to Discos, the rest are for other companies in the value chain – generating companies, the bulk trader, gas suppliers, etc.

“So if you don’t pay and you accumulate debt, what you are looking at is a possible total collapse of the entire power sector. That is what we seek to avert by this action.

“We need this fund to energise the power sector; to ensure electricity supply and to grow the sector,” he said.

Oduntan noted that the operations of all distribution companies were hampered by huge indebtedness of these legacy debtors.

Government establishments, comprising ministries and departments, military formations, security agencies owe each distribution company as follows:

Abuja Disco – N18.6 billion, Eko Disco – N8.6 billion, Kaduna – N8.2 billion, Enugu- N7.2 billion, Ibadan- N6.8 billion, Ikeja- N5.9 billion, Port Harcourt – N6.8 billion, Benin – N5.8 billion, Jos – N6.5 billion, Yola – N2.4 billion and Kano – N1.2 billion.

While electricity consumers across the country expect the distribution companies to provide modern facilities such as transformers, pre-paid meters, etc, and render world class services, their ability to deliver on these expectations has been seriously constrained by the shortage of funds occasioned by the huge indebtedness and government’s inability to implement the power tariff structure, which would have made funds available to them.

Energy analysts are contending that unless this funding crisis is resolved through the prompt payment of the huge debts and implementation of the new power sector tariffs, the nation’s hope of improving power supply may remain a mirage.

Realising the enormity of the financial challenges the Discos are facing, Fashola recently advised them to divest 60 per cent shares in the utilities through initial public offerings, in order to access more liquidity.

This suggestion has however been roundly rejected by energy experts, most of whom contend that the privatisation agreement the Discos entered into with the Bureau of Public Enterprises (BPE) was clear that no investor will be allowed to sell more than 5 per cent of their shares in the first five years post-privatisation.

What the government should do, according to analysts, is to promptly pay up the huge debts of the MDAs so that the Discos raise fund for their operations.

They also urged the federal government to pursue its plan to secure a N309 billion bond to finance the shortfall in the Nigerian electricity market.

Oduntan added: “One indisputable fact is that the power sector needs to be well-funded. In other climes, governments don’t compromise making such a sector to have access to the needed funding.

“In addition to immediately ensuring that the MDAs’ indebtedness to the sector are settled forthwith, the federal government should also pursue this bond targeted at financing the shortfall in the Nigerian electricity market.

“It is a major way out of our electricity crisis. It is the shortest route to industrial growth, as there can’t be industrial growth without stable power supply.”