Power: Discos’ Revenue Remittances to Market Drop to 30%

Market operator to escrow their accounts, enforce security bonds

Chineme Okafor
The monthly revenue remittances of the 11 electricity distribution companies (Discos) to the Nigerian electricity market have dropped further to 30 per cent from about 58 per cent that it was in the early part of the year, the Market Operations (MO) department of the Transmission Company of Nigeria (TCN) has said.

The MO also linked this sharp drop in revenue remittance levels of the Discos to their disregard for market rules approved for the Transitional Electricity Market (TEM).

MO’s acting Managing Director, Moshood Saleeman, said yesterday at the 2016 fourth quarter workshop for participants in the electricity market which his department organised in Abuja, that constant disregard for market rules by all segments of the industry had resulted in its poor financial status.
Saleeman said the MO had in this regard intimated participants, especially the Discos, of its decision to begin enforcement actions against their recalcitrant behaviours.

He stated that going forward, the MO would have to escrow the accounts of defaulting Discos or activate their security bonds to make up for their market failures.
“The average remittance is not too impressive, we are talking about less than 30 per cent collection and we expect that if we can go a little bit higher, it will be better for the industry and that is why we are insisting that people respect the rules.

“This meeting essentially is to awaken all market participants to be disciplined and comply with market rules because without discipline and compliance, we may not be able to achieve much in the sector,” said Saleeman.
He further stated: “We try to emphasise on liquidity and how the market participants especially the Discos can ensure that they pay on time for the entire value chain because it is the Discos that need to bring money to the market to service all these service providers.”

“The Transitional Electricity Market (TEM) has been declared and we stand by it, and it is supposed to be based on contracts. People should comply with their contract terms and that is why we are here.

“We have the enforcement that can come into play, but because we are still on a journey and don’t want a situation where some of these companies will go under, we try to be careful so that we don’t enforce it totally but the signal we are giving now is that we will enforce the penalties which is to enforce the security deposits and even escrow the accounts of Discos concerned,” he added.

Similarly, the acting Managing Director of TCN, Dr. Atiku Abubakar, who was represented by the acting Managing Director, Transmission Service Provider (TSP), Mr. Tom Uwah, said the plans and activities of the TSP were being impacted by the poor remittance and compliance levels of the Discos.

He explained that plans to grow the transmission capacity of the country from its current 5,500 megawatts (MW) to 6,000MW by December 2016, and then 20,000MW by 2022 would be determined by the market’s respect for existing rules in the TEM.

“The most critical impact of the non-compliance is that of financial liquidity as it affects service providers who are not covered by any payment guarantee in the market.

“In particular, payments to TSP have been so low that it cannot carry out its network maintenance, reinforcement and expansion of the grid. You are all aware of the transmission bottlenecks currently affecting power evacuation that are requiring urgent attention. This becomes critical and a sort of mismatch in view of the steady growth of generation capacity in the industry,” said Abubakar.