N80bn Electricity Debts: Why Estimated Billing May Persist

Despite promises to the contrary and stipulations in the power purchase agreements, electricity distribution companies (Discos) have no plan to meter every customer now or in the near future.
Discreet but extensive checks by the Nigerian Tribune at the Bureau of Public Enterprises (BPE), Nigeria Electricity Regulatory Commission (NERC), Federal Ministry of Power, Works and Housing and Transmission Company of Nigeria (TCN), in Abuja, revealed a general agreement among the stakeholders that current electricity charges are still below commercial rates despite multiple increases in recent years.
Although efforts by the Nigerian Tribune to obtain copies of Share Purchase Agreement (SPA) between the companies and BPE was unsuccessful, as they were said to be confidential documents, an official said the Federal Government has actually not adhered to its side of the bargain, thus, making it difficult for regulators to also insist on strict adherence to the agreements by the investors.
The source admitted that part of the deal was for distribution companies to progressively minimise power losses by ensuring that every consumer is captured in the revenue sheet and meters provided, but said that it was equally agreed that government ministries, departments and agencies in the federal and sub-national levels must pay off their accumulated debts.
“However, a memo suggesting that the debts be deducted from source was sent to the Minister of Finance, who in turn forwarded it to President Goodluck Jonathan. Jonathan approved it, but nothing happened until that administration ended and since the present government came in, nothing has also been done about it.
“Right now, customers especially governments are owing the companies over N80 billion and they cannot even go to banks to borrow money because they have used their facilities, the Central Bank of Nigeria’s N200 billion loan that is inadequate, to solve their challenges,” the source explained.
Another official in another agency said “Discos prefer to purchase their meters from offshore sources because there, they have opportunity of credit facilities whereas Nigerian meter manufacturers insist on cash payment.”
The source said depreciation of naira has made the N49,000 meter price grossly unrealistic even as the Discos have not been allowed to transfer the increment to customers.
Nigerian Tribune further gathered that the fixed charges that was removed from monthly bills shortly before the 2015 elections was a political decision because the industry was not ripe for such removal.
It was further learnt that the Federal Government was also responsible for a substantial part of the woes in the industry by not expanding transmission facilities as agreed thus suppressing expansion of electricity generation by Generating Companies (Cencos).
Some of the Gencos have doubled their capacity since private investors took over but since transmission capacity is less than 6,000 megawatts, such Gencos are being asked to produce less than their capacity.
Meanwhile, there is serious lobbying by senior civil servants, politicians and businessmen for government to review the power privatisation.
Nigerian Tribune gathered that civil servants and politicians believed they have lost great sources of making extra money and appointments while powerful businessmen who lost out during the privatisation process are pushing for its cancellation so that they could also partake.
However, an official told the Nigerian Tribune that there are some clauses in the SPA that make it difficult for any rash decision “because if the cancellation comes from government without the companies being in default, treasury will, aside returning their purchase fund, calculate the profits that they would have made over a period of five years and pay the companies.
“But if it is proved that the companies were the ones that failed to meet the terms of agreement, government will re-purchase the company for just US$1.”