Debtors face mass disconnection

Barring any last minute truce, electricity distribution companies in Nigeria are poised for a showdown with their historic debtors, as they (the debtors) face the possibility of mass disconnection of electricity supply in the days ahead.

The electricity distribution companies (Discos) have, for months, been groaning under severe liquidity constraints because of unpaid utility bills from residential customers to commercial, industrial and particularly, from the Ministries, Departments and Agencies (MDAs) across the three tiers of government. Military and security agencies are similarly guilty of huge indebtedness to the distribution companies.

Sunday Oduntan, executive director, Association of Nigerian Electricity Distributors (ANED), disclosed that, as of the end of April, the total indebtedness of MDAs, military and security agencies inclusive, stood at approximately N93 billion made up of N39.1 billion pre-privatisation and N39.5 billion post privatisation as well as outstanding interest of N15 billion, which the Bulk trader charges Discos for late payment of their Energy bills arising from non-settlement of utility bills.

A breakdown of this huge sum is as follows: Abuja DISCO – N18.6 billion; Eko DISCO – N8.6 billion; Kaduna – N8.2 billion; Enugu – N7.2 billion; Ibadan – N6.8 billion; Ikeja – N5.9 billion; Port Harcourt – N6.8 billion; Benin – N5.8 billion; Jos – N6.5 billion; Yola – N2.4 billion, and Kano – N1.2 billion.

To fully appreciate the impact of the non-payment of utility bills by government agencies, it should be recalled that last October, the Discos, together with National Electricity Regulatory Agency (NERC), the Nigerian Bulk electricity Trader (NBET) and electricity generating firms met with the Vice President Yemi Osinbajo and a modality for settlement of outstanding receivables from the government agencies was worked out.

Wherein, the government was to work on the arrangement of deducting the outstanding receivables for utility bills of approximately N71.6 billion, from source. And based on this agreement, the NERC deducted the outstanding receivables of the Government from the collection loss component of the sculpted tariff. As such, the revenue shortfall, which the entire industry values chain is suffering and has been exacerbated by the government not honouring its obligations to the electricity industry.

Cash strapped and further squeezed of working capital by the resistance that greeted the new power tariff structure, the distribution companies’ predicament has been made more precarious by the refusal of these historic debtors, particularly the MDAs to pay for power consumed.

This, according to source, informed the decision of the Discos to publish advertorial, giving its historic debtors ultimatum within which to pay up or face imminent mass disconnection of electricity. Sources close to the Discos said they are determined to carry out the threat unless the authorities concerned resolve the issue.

Some of the Discos have started publishing the names of their historical debtors. Benin Disco has started this in the past two weeks.

Oduntan stated last Friday that his association (ANED) was still working with the office of the Vice President to resolve the issue in the interest of all stakeholders. He disclosed that the office of the Vice President has come up with a new template, which all Discos are to adopt in which they will state, in clear terms, what each agency, department, Army, Air force, Navy, etc. is owing to guide the Vice President’s office in the resolution of the debt crisis.

As at mid-day last Friday, all Discos have submitted their claims using the new template.

Oduntan disclosed that although his association believes in the ability of the Vice President’s office to resolve this long drawn indebtedness battle, but that his member companies are very serious about their threat to embark on mass disconnection of historic debtors in the days ahead if they refuse to honour their commitment.