Editorial

Dilute shares of Discos now

by Editorial

September 7, 2017 | 12:45 am
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It is now apparent that the 11 Distribution companies in Nigeria are the weakest link in Nigeria’s electricity chain. According to a summary of the daily load allocation between August 13 and 20 by the Transmission Company of Nigeria (TNC) show that the 11 electricity distribution companies in the country rejected 9, 310.64 megawatts (MW) of electricity from the Generation Companies (Gencos) in just one week ostensibly because their distribution facilities could not take up all the electricity allocated to them. The report showed that the Discos collectively rejected 983.6MW, 1,062.11MW, 1,8021MW, 1,506.03MW, 1,581.36MW, 701.31MW, 629.94MW, and 1,044.03MW respectively.

This is happening at a time when report of the performance of the sector by the Advisory Power Team in the Office of the Vice President showed in clear terms that the Discos have remained the weakest link in the Nigerian electricity value chain as they continue grapple with dilapidated and collapsing network infrastructure that cannot support increased electricity distribution in Nigeria. According to the report, as at 2015, “Nigeria’s distribution companies suffer significant losses, with ~46% of energy lost due through technical, commercial and collection issues.” The situation is worse now than 2015.

To capture vividly the state of the industry, the minister of power, works and housing, Babatunde Fashola, recently in a remark in Kano, revealed that Nigeria currently has up to 6,863MW of electricity that can be wheeled out to homes and industries in the country, but cannot send all of it to consumers because the distribution facilities of the Discos were poor and unable to take up all of the generated power. The minister said improvement in gas supply to thermal power plants and abundant rains in the reservoirs of the hydro plants in the north has greatly increased the electricity generation capacity of the country, but the Discos have remained the only stumbling block to supplying consumers.

We need to restate that the original intention of government in privatising the sector and selling the 11 Discos to core investors is on the understanding that the investors will invest in grid and network expansion and renewal. When the distribution companies took over the assets, they made commitments regarding grid expansion, number of new connections and capex to be spent on meters.

However, the Discos have violated the agreement reached with the government. They have failed to deliver on all accounts. According to the BPE, DisCos have only succeeded in metering 10 percent of electricity customers. All they do is to charge and collect outrageous bills while power infrastructure continues to deteriorate.

The government has a responsibility to ensure that the power sector is developed. Since the Discos have become the weakest link in the power chain and have shown no appetite or capacity to invest in the sector, the government must take steps to dilute their shares as provided in the funding clause in the performance agreement between the government and the core investors. It cannot allow the Discos that were privatised in the first place, to enhance efficiency in the sector, become a drawback.

 

 


by Editorial

September 7, 2017 | 12:45 am
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