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Tuesday, 18 April 2017

Trending Gist as FG, DISCOS Clash Over Revenue Accounts

The fresh gist as Electricity distribution companies (DISCOS) are kicking against the Federal Government’s plan to centralise their revenue accounts.


It is reported that the decision is being taken by the Federal Government because of the DISCOS’ poor monthly remittances.

In a statement yesterday, the Association of Nigerian Electricity Distributors (ANED) said such a move amounts to the nationalisation of the DISCOS, which were franchised when the Federal Government unbundled the Power Holding Company of Nigeria (PHCN) Plc.

The association recalled that the
Nigerian Bulk Electricity Trading Plc (NBET) repeatedly published that the DISCOS remitted only 30 per cent of their monthly energy invoices in 2016.

The Market Operator (MO), an arm of the Transmission Company of Nigeria (TCN), Mr. Moshood Saleeman, the Executive Managing Director, had in October last year, at a market participants’ workshop in Abuja, said if the poor collection continued, the DISCOS’ revenue accounts may be escrowed.

But ANED’s Director of Research and Advocacy, Mr. Sunday Oduntan, who signed the statement, warned: “Any attempt to centralise or escrow the DISCOS’ revenue accounts would be tantamount to nationalisation or appropriation of the DisCos.”

Oduntan said such action will negate the objectives of the National Electricity Power Policy, 2001 (NEPP) and the Electric Power Sector Reform Act, 2005 (EPSRA), of a private sector-owned and managed electricity sector.

The statement reads: “It would also send very wrong signals to domestic and international investors that Nigeria is not fully open for private sector investment and that we are still partial to the old habits of nationalisation, preventing the injection of the cheap and sorely needed capital injection that is critical to the rehabilitation and improvement of electricity infrastructure.”

Oduntan said it will be improper to have a, supposedly, private sector-owned and managed business having the government as the manager of its revenues.

ANED advised the Federal Government to avoid any consideration of regulations or action that intrudes into corporate responsibilities of procurement, financial management or personnel management.

“Relative to procurement, we are not aware that Nigerian Communications Commission (NCC) issues regulations to guide the internal procurements of the telecommunication companies; Central Bank of Nigeria (CBN), that of the banks; or the Department of Petroleum Resources (DPR), that of the oil companies”, the association said.

The power investors also said they learnt that the government was planning to call for the declaration of eligible customers for the electricity market.

Kicking against the move, Oduntan said that the minister can make such declaration only “when a competitive market exists in the Nigerian Electricity Supply Industry (NESI).”

ANED said such competitive market, driven by efficiency, presence and utilisation of industry contracts does not exist now. It said the minister under Section 27 of the EPSRA 2005, has authority to determine “end-use customers’ who then constitutes eligible customers.

The investors, however, said Section 28 of the Act requires that the DISCOS must be compensated for any reduction in their ability to “earn permitted rates of return on their assets” or any inadequacy in their revenues, as a result of such determination.

They warned: “What this means is that, consumers will have to suffer an increase in their electricity tariff, to accommodate this premature declaration of eligible customers.”

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