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.
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| *Idowu Oyebanjo |
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.
*Idowu Oyebanjo CEng MNSE MIET writes from the United kingdom(oyebanjoidowu@yahoo.com)
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