N701bn Stimulus May Briefly Slowdown Plans to Escrow Accounts of Discos

Chineme Okafor in Abuja

The 11 electricity distribution companies (Discos) in Nigeria’s electricity market may get a temporary reprieve on the plan by the Nigerian Electricity Regulatory Commission (NERC) and Market Operations (MO) Department of the Transmission Company of Nigeria (TCN) to escrow their accounts and the monthly revenues they get from the market, THISDAY has learnt.

This is because of the imminent release of the N701 billion financial stimulus the federal government has planned to give the Nigerian Bulk Electricity Trading Plc (NBET) to meet up with payments to electricity generation companies (Gencos) and gas suppliers, and with which it hopes to improve power generation, supplies, and revenue collections by the Discos.

According to the Executive Director of the MO, Mr. Moshood Saleeman, the NERC and MO had perfected plans to begin to enforce all existing rules of the electricity market, including rules on payments and guarantees, but may have to consider the government’s moves to stimulate the operations of the Discos.

Saleeman stated this at a workshop organised by his department for all market participants yesterday in Abuja. He also disclosed that the average monthly revenue remittances of the 11 Discos was now 35 per cent.
“Aside from the escrowing of account of the Discos, there are other things we are working out with the Nigerian Electricity Regulatory Commission (NERC) to ensure liquidity in the market.

“By the rule, the MO has the power to escrow the account of Discos that have not made payment but the federal government is trying to provide money to avoid this. Recently it provided a buffer of N701 billion for the Gencos to make sure the electricity market becomes better,” said Saleeman.

He, however, noted that MO would go on to enforce the rules governing the market, adding that stakeholders’ respect for market rules was vital to getting the market to operate efficiently.

“Henceforth, MO will enforce the rules and penalise defaulters – Market Rule 45. From today, we are going to ensure that all the rules are complied with. They include rules about payment to the market, and other essential rules for the market to grow,” he stated.

The Discos have since opposed the government’s plans to escrow their accounts to make them pay in full for electricity supplied to them. They in their opposition to the move, alleged that it would amount to the government taking over their operations.

But on the Discos’ revenue remittance levels, Saleeman explained: “We now experience a marginal increase of 35 per cent in the remittances of the Discos but we are not yet there; it is improving gradually.”
Also, the Executive Director, Transmission Service Provider (TSP) Head, Tom Uwah, reiterated that the inability of Discos to take up generated power from the system has continued to result to high frequency which often led to system collapses.

Similarly, the Managing Director of TCN, Mr. Usman Gur Mohammed, urged stakeholders in the power sector to desist from the frequent blame games they get involved in, and work to advance the efficiency of the market.
Mohammed, who was represented by TCN Director of Finance and Accounts, Mr. Sunny Iroche, confirmed that Discos’ rejection of load was still a challenge to the transmission company.

He said: “Load rejection causes high frequency in transmission when the Discos reject load and we have to tell the Gencos to reduce generation so we can balance the system.”

Mohanned also stated that the TCN has reduced the percentage of transmission losses it records to about eight, from 10 per cent that it was some years back.