By Idowu Oyebanjo
The Federal Government
has announced plans to escrow and beam its searchlight into the revenue accounts
of the operations of the DisCos due to poor monthly remittances. Although
DisCos have condemned the move, this is a good step in the right direction. To
address the problems of NESI, a holistic view of every aspect of the
multi-faceted problems plaguing it is required with a view to solving them in a
coordinated manner.
One of the major problems in the Nigerian Electricity Supply Industry (NESI) today is the potential for illiquidity. In simple terms, this arises when DisCos declare, whether truthfully or otherwise, that they have not collected enough money from consumers of electricity and so are unable to make full payments to the bulk electricity trader, NBET, for electricity received.
This has the potential
to always create illiquidity in NESI because their remittances should have been
used to pay all key stake holders in the industry including but not limited to
GenCos, TCN, Gas providers, market operator, NERC, NBET etc. The solutions to
address this anomaly include a massive investment in customer metering,
reduction in network losses, preventing electricity theft and collusion of
staff of electricity companies with consumers to defraud the industry, discontinuation
of estimated billing, and ensuring that revenues collected by DisCos in behalf
of NESI is transparent to all key stakeholders, and not least the Federal
Government which still owns 40% of DisCos. The government has chosen to
implement the last of the afore-mentioned solutions but the DisCos have frowned
at the move. Thus a critical review of the position of DisCos is in order.
Reacting to the planned
move by the Federal Government, Discos, under the aegis of the Association of
Nigerian Electricity Distributors (ANED) have spoken against the move in clear
but illogical terms. ANED has argued that the move is tantamount to a
re-nationalisation of the DisCos. This is true but that is what is required to
salvage the current situation. If the DisCos cannot invest in the network, and
will require government bail-out, then the government (and any lender for that
matter) will like to have a transparent view of the revenues collected for
accountability, probity and possible repayment of loans in the form of bail-out
funds.
Furthermore, ANED has
posited that this move will send the wrong signals to local and international
investors but this is far from the truth. Rather, the opposite will be the
case. True investors appreciate transparency and will see the seriousness of
the administration in maintaining a financially healthy power market and they
will be drawn to NESI once the market stabilises to replace the present crop of
“investors” who lack the technical cum financial muscle to pull this through.
Rather than see this as an effort to ensure the survival of NESI, ANED has said
the move will prevent the “injection of the cheap and sorely needed capital
that is critical to the rehabilitation and improvement of electricity
infrastructure”. However, it has to be stated that it was the continued lack of
investment in the network by the so called investors (they are not) since they
took over the national assets that has prompted this move by the Federal
Government in an attempt to save the industry. Ideally, DisCos should find the
money to invest in the network.
Finally, ANED has
argued that this kind of move has not been implemented in the communications
sector. Perhaps there is need to remind the association that the operators in
the communications industry have not asked for unfounded bail-outs and they are
largely regulated by means of competition which differs from the regulation of
monopolies which is what DisCos are.
The Federal Government
is right to demand transparency from DisCos and this is part of regulating the
privatised monopoly. It should never be construed as an intrusion if there is
nothing to hide. This will bring sanity and improve the financial health of the
industry. Yet, there are methods to achieve this kind of regulation for it not
to be seen as intrusive even by the DisCos.
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