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Home Business News

DISCOs are owing the Federal Government this amount

Onome Ohwovoriole by Onome Ohwovoriole
October 2, 2017
in Business News
DISCOs are owing the Federal Government this amount
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Minister of Works, Power and Housing, Babatunde Fashola has again tackled Distribution Companies (DISCOs) in the country. According to him, if debts owed by DISCOs to the Nigerian Bulk Electricity Company (NBET) and  the Market Operator (MO) were to be forcefully collected, it would lead to bankruptcy proceedings. Fashola made the statement at a power roundtable organized by the Lagos Chamber of Commerce and Industry (LCCI).

There is another debt that you have not yet been compelled to pay. It is the debt that arises from the losses, which at any event, is your debt because under the vesting agreement with NBET, you owe NBET and the last figures I saw was over N400 billion owed by the Discos to NBET and at least about N136 billion owed to the market operator,”

The NBET purchases power from the Generating Companies (GENCOs) and then sells to the DISCOs. The Market Operator is part of the Transmission Company Nigeria (TCN) which moves the electricity generated to the GENCOs.

Why the DISCOs are owing money

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DISCOs are unable to meet payments to the NBET and MO, because the present tariffs are below the cost of generation. In addition, many consumers have refused to pay their electricity bills, as they believe the estimated billing is unfair. Others have outrightly refused to pay, yet consume electricity. Moves to increase tariffs have been suspended due to a court order.

They are also burdened by the bank loans which were taken by their owners during the privatization programme. The loans were denominated in dollars, and the depreciation of the Naira against the dollar, has made repaying them more expensive. Revenues earned however are in Naira, creating a mismatch. Egbin Power Plc last week had to shut down due to a lack of funds to carry out maintenance.


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Tags: Babatunde FasholaDISCOSNews ReviewPower Sector
Onome Ohwovoriole

Onome Ohwovoriole

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

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