FG recovers $64.6m electricity debt from International Customers

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President Muhammadu Buhari

…Says Power distributors are to pay interest on N120bn debt ***

The Federal Government on Monday announced that it had recovered 64.6 million dollars electricity debt from its international customers.

Minister of Power, Works and Housing, Babatunde Fashola announced  this at the 21st monthly power sector meeting in Asaba.

Fashola, in a text of  his opening remark made available to the News Agency of Nigeria (NAN) in Abuja,  said that  the money recovered was from  Benin and Niger Republics.

He said that Nigerian Bulk Electricity Trader (NBET) would work out modalities for distribution of the fund to the value chain operators.

The minister also announced that Rural Electrification Agency (REA) had completed guidelines for the operation of the rural electrification fund.

He said that the fund would help vulnerable groups and communities to gain access to funding to support their electricity development programme.

“By way of explanation, the rural electrification fund was created by section 88 of the Electric Power Sector Reform Act (EPSRA) of 2005 to promote support and provide rural  electrification  access.

“The fund will provide a partial single payment capital subsidy and or technical assistance to eligible private Rural Power Developers, NGOs or communities to invest in options such as hybrid mini grids or solar home systems to scale up rural access to electricity.

“What they are likely to get are minimum amounts of N3.5m and maximum amounts of  N106m or 75 per cent  of project cost  whichever is less,” he said.

According to him, REA will publish details of  the guidelines and eligibility.

These, he said, were only headline items of developments that characterised the progress  the government was making month after month, especially since March 2017.

He said that progress was  also being recorded  at  the distribution levels.

He listed the recent achievements in the franchise areas of the Benin DisCo to include  the newly completed  Asaba main 2x15MVA injection  substation commissioned on Monday.

Fashola said the completion of the substation was expected to improve service by reduction of  load shedding and increase  power supply to Okwe, Akuebulu, Jarret, Ogbeofu, Osadebe way, Okwe housing estate and Oduke.

“Minute by minute, hour by hour, day by day, week by week and month by month we have not only gained momentum, we are seeing progress that inspires us to continue, because the power problem can be successfully managed by Nigerians.”

On  further  measures  to improve power supply  in the coverage  areas of the Benin DisCos, Fashola said Asaba – Benin 330KV line was energized to service on  Nov. 3.

Asaba 330kv substation is now being fed from both Benin and Onitsha.

“The line also raised the number of circuits from Onitsha to Benin to three.

According to him, a 40mva 132/33kv mobile transformer is undergoing installation at Auchi with in-house capacity to be commissioned in two weeks time.

Fashola also disclosed that a new 330/ 132kv substation would be constructed at Okpai with a 132kv line from the station to service a proposed 132/33kv substation at Kwale.

He also hinted that installation of a new 60mva 132/33kv transformer would commence at Irrua transmission station any time from now.

The minister thanked well-meaning Nigerians who acknowledged that their experience on the power supply had improved, adding that their  honesty inspired government and the operators  to  continue the improvement.

He, however, admitted  that  there  were other challenges that  must  be collectively addressed.

On estimated billing and metering, he also explained that government and sector operators were anxiously awaiting for  the regulation from NERC to open up meter supply business.

In the meantime, Power distribution companies are going to start paying interest on the debt they owe the electricity Market Operator since the commencement of the Transitional Electricity Market in January 2015, the Federal Government has declared.

It was gathered that the government, through the Nigeria Bulk Electricity Trading Company, had started adding up the interest on the over N120bn, which the Discos owe the MO since the past two years.

This is coming as the Discos have demanded that the Federal Government should allow them charge interest on unpaid electricity bills, because the NBET has started compiling interest to be paid by them on debt owed the MO.

On August 18, 2017, The PUNCH had exclusively reported that the indebtedness of the Discos to the MO, in terms of stipulated remittances to the MO, had risen to N120.7bn.

Sources at the NBET, however, stated that the debt had risen beyond the N120bn recorded in August, as many of the firms were still remitting below 40 per cent to the MO.

Our correspondent gathered that the shortfall in remittances by the 11 Discos to the MO had been accumulating since the commencement of the TEM in January 2015.

In a bid to stop the poor revenue remittance by the Discos, the NBET advised the firms to make complete payment for services rendered to them by other arms of the power market and stressed that it had started adding up the interest on the Discos’ debt to the MO since 2015.

The latest decision by the NBET was announced to stakeholders at the 20th power sector monthly meeting and was captured in the meeting’s minutes that were released to industry operators in preparation for the next gathering.

The minutes, which were obtained by our correspondent from the Federal Ministry of Power, Works and Housing in Abuja, read in part, “The NBET advised the Discos to make 100 per cent payment on services rendered as the NBET had already started the process of adding up interest on the amount owed to the MO since 2015.”

The MO, in its report at the meeting, stated that the Yola Disco made 100 per cent payment, while it received only 25 per cent payment from the Abuja and Kaduna Discos on August 15 and 28, 2017, respectively, “which was contrary to the claims made by them in the last meeting.”

The MO, therefore, informed participants at the event that plans were underway to sanction defaulting Discos.

On hearing that the Discos would start paying interest on the debt they owed the MO, a senior official of the Port Harcourt Disco appealed to the MO to step back from enforcing sanctions on the power distributors that failed to make 100 per cent payment.

An official of the Enugu Disco requested to know if it was possible to charge interest on unpaid electricity bills, and was supported by a representative of the Abuja Disco, who, according to the minutes, appealed that the firms be allowed to charge interest on debts owed by government ministries, departments and agencies following the NBET’s comments.

The interim Managing Director, Transmission Company of Nigeria, Usman Mohammed, explained that the MO arrived at the decision to sanction defaulters after it discovered that only the Eko and Yola Discos were making 100 per cent payment to the MO for services rendered.

He noted that the decision was taken in order to sustain the TCN, NERC and other service providers funded by the market.

The Minister of Power, Works and Housing, Babatunde Fashola, who chaired the meeting, advised the Discos to meter customers to avoid instances of delayed payments and not to charge any interest on amount owed.

The meeting also directed NERC to determine the MO’s sanction regarding 100 per cent payments for services rendered and delayed payments.

It also mandated the MO and NBET to synchronise their report on payments for services rendered in future presentations.

Additional report from Punch

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