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N50bn debt owed by Discos cripples power sector

By on March 12, 2015

The over N50bn debt owed the owners of the National Integrated Power Project plants by 11 electricity distribution companies has become a heavy burden threatening the power supply industry in the country, investigation has shown.

Our correspondent learnt that six NIPP plants being run by the Niger Delta Power Holding Company Limited were groaning under huge debts of power sold to the distribution companies but had not being paid for.

It was also learnt that other power generating companies that were carved out of the defunct Power Holding Company of Nigeria were also weighed down by huge debts owed by the distribution companies. The amount owed to the rest of the generating companies could not be ascertained as of press time.

Our correspondent gathered that as of the end of January, the distribution companies had accumulated a total debt of over N50bn for power generated by the six NIPP plants and sold to them by the NDPHC.

It was also learnt that the bills for power generated and sold to the distribution companies for the month of February were still being verified by the relevant parties. This is expected to increase the volume of the debt when the verification is completed.

The six plants are said to be responsible for the generation of between 40 and 45 per cent of the power currently put on the national grid.

The spokesperson for the NDPHC, Mr. Yakubu Lawal, who spoke to our correspondent on the telephone, confirmed that the company was owed huge debts by the Discos but declined to give details.

“Yes, the Discos owe us huge debts. If we have the money they owe us, we will be comfortable. It will strengthen our operations,” he said.

In the absence of a defined timeline for the payment of the debt, Lawal expressed hope that the company would receive a substantial part of the recent power intervention fund announced by the Central Bank of Nigeria.

Eighteen electricity firms were carved out of the defunct PHCN as part of the process to reform the electricity industry. These include the Transmission Company of Nigeria, 11 distribution companies based on geographical coverage, and six generation companies.

For the Abuja Distribution Company, Kann Consortium had emerged as the core investor; the Benin Disco, Vigeo Power Consortium; Eko Disco, West Power and Gas; Enugu Disco, Interstate Electrics Limited; while for the Ibadan Disco, Integrated Energy Distribution and Marketing Limited emerged as the core investor.

The EDC/KEPCO Consortium emerged the core investor in the Ikeja Disco; Aura Energy Limited for Jos Disco; Sahelian Power Limited for Kano Disco; 4Power Consortium for Port Harcourt Disco; while Integrated Energy Distribution and Marketing Limited emerged for the Yola Disco.

For the power generation companies, North-South Power Limited emerged for Shiroro Hydro Power Plc; Mainstream Energy Solutions emerged for Kainji Hydro Power Plc: CMEC/EURAFRIC Energy Limited won the bid for Sapele Power Plc; Amperion Power Distribution Limited emerged for Geregu Power Plc; while the Transcorp Consortium emerged as the core investor in Ughelli Power Plc.

Most of the electricity generation and distribution companies were handed over to the core investors in November 2013 after they paid the bid prices. However, a greater majority of the firms have been held down by poor financing as the core investors are still repaying the funds they borrowed from banks for the acquisition of the power assets.

Among the successor companies, it is the Discos that have interface with the consumers who pay electricity bills on monthly basis. The Discos purchase power from the generating companies for which they are expected to pay at the end of the month.

To boost their revenue base, most of the Discos have been increasing the monthly tariffs charged customers without reference to the Nigerian Electricity Regulatory Commission.

With estimated billing, many consumers have been complaining of arbitrary charges.

 

[Punch]