The local bank Letters of Credit (LC) submitted by electricity distribution companies (Discos) as guarantees may be activated for prompt payment of electricity sold to them, the Nigerian Bulk Electricity Trading Limited (NBET) has said.
The NBET, also known as the bulk trader said it has given the Discos up till Friday this week to meet up with an outstanding three months debt for energy delivered to them or it would be forced to activate their credit guarantees.
While frowning at the rising indebtedness in a notice of payment demand it issued to the 11 Discos, the NBET requested for the immediate payment for capacity and energy invoiced for February to April 2015, noting that the Discos are not complying with the 100 per cent energy payment mandate expected in the Transitional Electricity Market (TEM) rules.
It said that the average payments by Discos for the corresponding months were 80 per cent in February, 70 per cent in March and lower than 54 per cent in April. Consequently, the NBET said it is taking the first step through the notice in seeking compliance by the Discos, noting that failure to arrest the trend will worsen the cash crunch in the power sector.
The bulk trader also said that failure to comply would mean it using the payment security, bank guarantee already issued by eight Discos in their vesting contracts (VC) to settle the outstanding invoices while the three other Discos without the guarantees would have their revenues escrowed if they default by Friday thereby completely crippling their distribution activities as directed by the TEM’s supplementary order.
