IBEDC says Military, MDAs owe N5.9bn debt

Following the privatization of the power sector in November2013, Federal Government agencies and the military owe a total sum of N5.9billion debt to Ibadan Electricity Distribution Company (IBEDC).

This was disclosed at a media briefing in IBEDC’s head office in Ibadan. Speaking with journalists on Tuesday, the Managing Director, IBEDC, John Donnachie, stated that “although, implementing the new tariff will be challenging but we have to be honest and open to our customers. Presently, government agencies owe us N5.9billion. Out of this debt, the military owes us N4bn as at July 31, 2015, and this is affecting our operations, “Donnachie said.

He argued that the Discos are like revenue collectors for other stakeholders along the electricity value chain. After collecting the revenue from customers, they retain 25 per cent and disburse remaining 75 per cent to the Generating companies (Gencos), Transmission Company of Nigeria (TCN) and the regulators.

“We need to invest fund in the sector to improve our distribution networks and provide for adequate metering system. The liquidity issues make it difficult to resolve the problems of inadequate generation and transmission constraints. More importantly is the fact that distribution companies are unable to meet the operational costs of distributing power to their numerous customers, payment to generating and transmission companies, let alone their capital investments,” he added.

In his comments, John Ayodele, the Deputy Managing Director, IBEDC, noted that the capital expenditure allowed for IBEDC is inadequate for its operations, especially given the size of its metering and network improvements and upgrade requirement as well as reduction of Aggregate Technical, Commercial and Collection (ATC&C) losses.

“The reviewed tariff will assist us to quickly address the problem of estimated billing which today represents over 70 per cent of customers’ complaints and has been one of the reasons for various protests experienced since we took over two years ago.

“In view of the above, we have to provide funds upfront to pay for investment made each year and expects to recover the same plus any interest over the life of the assets,” he said.

To ensure effective metering of its numerous customers, Ayodele stated that IBEDC has placed order for about 100,000 units of prepaid meters that are intend to use for our customers in 2016 to resolve the problems of estimated billings.

“We require N7.5bn annually for metering and N3bn annually for network expansion, but we need fund to do that and we are pleading with the government ministries, departments and agencies including the military to help us settle their debt for us to serve them better.”

Ahead of the implementation of the new electricity tariff in which the controversial fixed charges have been eliminated, the 11 discos have been calling on their debtors, especially the government agencies and the military to pay up their debt.

This is because for decades, the power sector has been characterized by same set of challenges ranging from lack of funding, inadequate power supply, poor and neglected transmission and distribution networks, massive power theft and vandalism.

Besides the value chain inefficiencies, about 50 per cent of power bought is not paid for due to power theft, inadequate collection infrastructure, insufficient/non cost reflective tariff, exchange rate factor, and insufficient capital expenditure.