Disbursement of N231bn power intervention fund not yielding result
Federal lawmakers, regulatory agencies and other stakeholders on Wednesday expressed grave concerns over the disbursement of N231 billion to Electricity Distribution Companies, Generation companies and Gas companies without commensurate results in the power supply to consumers across the country.
They expressed the concerns during the investigative public hearing into ‘Excessive electricity charges being levied on consumers by DISCOs, chaired by Ajibola Famurewa (APC-Osun), urged CBN to discontinue disbursement of public funds to pre-qualified business entities who bidded for the privatisation of Power Holding Company Limited but channeled the funds to other priority sectors especially the medium and small scale enterprises (MSMEs).
Famurewa who harped on the need to ensure metering of all electricity consumers within the next three years, expressed support for criminalization of current estimated billing system alongside energy theft.
“It is pertinent to state that this committee is conscious of the economic plight of our citizenry. Accordingly, this task was undertaken in order to restore the confidence of Nigerians and reassuring then that the present administration has not reneged on its promise of zero tolerance to arbitrariness and exploitation of citizens no matter the personalities involved,” Famurewa maintained.
He also urged CBN to liaise with relevant regulatory agencies to provide funds for local manufacturers of meters without further delay.
Some of the lawmakers who frowned at the level of performance of the new investors, alleged that the money disbursed by the apex bank to the companies were used to procure exotic cars for its personnel rather than investing it into the power sector.
In his presentation, Godwin Emefiele, CBN Governor disclosed that the intervention by the banking sector through the disbursement of N231 billion.
Emefiele who was represented by Boma Binima, Head of Infrastructure Financing disclosed that the facility was give at 10% interest rate below the 23% market rate.
“The Nigeria Electricity Regulatory Commission (NERC) collaborates with CBN to intervene and provide a banking sector led solution to stabilize the market through provision of long tenured, low cost facility to settle the legacy gap debts to the PHCN generation companies and the shortfall during the interim rules period (IRP) up to 31st December, 2014 that added up to the sum of N231 billion.
“The bank therefore collaborated with the Ministry of Petroleum Resources, Ministry of Power and Nigerian Electricity Regulatory Commission to design the modality o the intervention. Under the scheme, all the market participants were to be paid their debts, DISCOs inclusive but the DISCOs were to serve as the primary obligors for the repayment of the facility from collections. Disbursements to DISCOs were to be tied to permit utilisation to improve distribution and reduce losses,” the CBN document read.
He added that a total of N158.74 billion has been disbursed under the facility as DISCOs meet contract terms under the Transition Electricity market.
Breakdown of the disbursement showed that 7 DISCOs got N49,841,913,007; 18 GENCOs got N73,545,871,340; 6 GASCOs got N24,892,952,271 while 6 Service providers got N10,463,904,265 within the period under review.
The document obtained by BusinessDay further showed that from the total sum of N49,841,913,007 disbursed to the 11 DISCOs, Benin DISCO got N2,181,890,920; Eko DISCO got N5,478,374,416.75; Enugu got N10,256,627,841.96; Ibadan DISCO got N11,367,311,028; Jos DISCO got N6,382,062,506.77; Kano DISCO got N7,638,444,123.46 while Port Harcourt got N6,581,172,298.51, respectively.
Similarly, from the total sum of N158.745 billion
disbursed to nine DISCOs, total sum of N28,918,816,641 interest was realised by CBN, N20,560,454,905 principal sum paid to date while N138,184,185,981 is outstanding.
Meanwhile, Abuja DISCO, Ikeja DISCO,and Kaduna DISCO and Yola DISCO got zero allocation because the companies owed the market.
According to the document, “the collection of the DISCOs as currently reported is still far below the cost of electricity generation cost in Nigeria estimated at 25%. There is massive shortfall in payment to the industry as well as loses far above best practice which threatens the sustainability of the industry.”
The six-month average monthly collection of the AEDC was pegged at N6.065 billion; IBEDC was N4.313 billion; EEDC was N3.386 billion; PHEDC was N2.035 billion; KEDC was N2.208 billion; JEDC was N1.179 billion; BEDC was N3.295 billion; IKEDC was N5.472 billion while AEDC was N8.103 billion.
Some of the lawmakers who spoke on the development, stressed the need for CBN to concentrate on other sectors of the Nigeria’s economy rather than giving public funds to pre-qualified business entities who won bid for the privatisation of Power Holding Company Limited.
They alleged that the money disbursed to the companies were used to procure exotic cars for its personnel rather than investing it into the power sector.
In his intervention, Muazu Lawal (APC-Zamfara) said: “I think Discos and others are not ready for the job before them. How can you be operating like that. You just go about billing people the way you like without considering the actual power they consume. This happens everywhere in the country, including here in Abuja. This is unacceptable.
“Discos are either operated by fraudsters or they’re just extorting money from Nigerians. If you’re not ready for the job, tell us you’re not ready,” the lawmaker stated.
Speaking earlier, Speaker Yakubu Dogara who expressed displeasure over the financial hardship being experienced by most of our people, due to the high electricity charges by DISCOs, maintained that the current situation has further compounded the difficulty brought about by the economic downturn in the country.
“The information available to the House was that, after the unbundling of the Defunct PHCN, the DISCOs hurriedly installed new sets of prepaid meters, which gobble the units purchased much faster than the older prepaid meters they met on ground. This prompted the raising of the Motion upon which the House resolved to set up this Ad-Hoc Committee to investigate the complaints.
“As most of the stakeholders present here may be aware, the House of Representatives is currently working on a Bill for an Act to amend the Electricity Power Sector Reform Act, 2004, to prohibit and criminalize estimated billing by electricity distribution companies and provide for compulsory installation of prepaid meters to all power consumers in Nigeria.
“The bill is already at the Committee stage, and it is meant to block another loophole by which the DISCOs are allegedly cheating consumers.
“It can be seen, therefore, that the work of this Ad-Hoc Committee is very germane to the successful implementation of the proposed Law. This Committee must unravel the veracity of the allegation of the presence of wrongly configured prepaid meters that are over-billing the already impoverished masses of this country. The success of this Committee’s work will ensure that the gains of the stoppage of estimated billing by the proposed law, are realised,” the Speaker assured.
Representatives of the 11 DISCOs, explained that 40% of the consumers bypass meters, adding that only 4 million customers were handed over to the new investors after the privatisation exercise.
According to them, the statistics provided by National Bureau of Statistics (NBS) data showed that 32 households.