Business News
FG owes DisCos over N500 billion in electricity Subsidy – PwC
The Federal Government owes the 11 DisCos in Nigeria over N500 billion in what is described as tariff shortfall from electricity subsidy.
The Federal Government owes the 11 Electricity Distribution Companies (DisCos) in Nigeria over N500 billion in what is described as tariff shortfall from electricity subsidy. This is disclosed in a recently published white paper by PwC titled, ‘Solving the liquidity crunch in the Nigeria Power Sector’.
According to the report by PwC, the electricity subsidy payment being owed by the FG to the power distribution companies is expected to rise to N522 billion in 2019, a 36% increase relative to the N384 billion that was owed in 2018. The debt has been soaring over the years, climbing to N235 billion in 2016, from N165 billion in 2015.
Electricity Subsidy
Essentially, tariff shortfall is the difference between the end-user cost-reflective tariff and the end-user allowed tariff (actual tariff) DicCos currently charge their consumers. It is money due to DisCos from customers.
[READ MORE: Discos to invest N935 billion in 5 years amidst recapitalisation calls]
Meanwhile, the shortfall is to be paid by the Federal Government, via the Power Sector Recovery Plan (PSRP) as part of the electricity subsidy.
In 2018 only, the tariff shortfall recorded by the 11 DisCos amounted to N384 billion. According to the PwC report, this was due to the fact that electricity consumers were not charged the cost-reflective tariffs.
DisCos 6-year loss
While Nigeria’s power sector faces several challenges, electricity distribution companies in Nigeria have steadily reported losses since their emergence in 2013. According to PwC report, there has been a steady growth in the amount of loss reported. In 2017, the total loss reported by DisCos stood at N417 billion.
As at 2017, Abuja and Ikeja Electric were the two most indebted power distribution companies in Nigeria. Also, since inception in 2013, electricity distribution companies in Nigeria have grown their long term indebtedness. Based on available financial reports, a sum of N98.1 billion is owed by 8 Discos with Ibadan Distribution Company recording the highest borrowings as at 2018.
Specifically, a total of N661.6 billion worth of electricity was billed by DisCos in 2018 but N437.9 billion was only received. This means only 66% of electricity billed was collected in revenue.
FG’s Intervention
It was disclosed that the challenges facing the power sector, range from low collection, non-cost reflective tariffs, and distribution losses, amongst others, hence, DisCos are unable to meet their obligations to NBET and this, in turn, spirals to other players in the power value chain (GENCOs, TCN, gas companies, banks etc.).
According to the PwC report, the liquidity crisis, which is the most critical challenge of the sector, necessitated the government’s intervention on three occasions to avoid total collapse of the sector.
[READ ALSO: FG may withdraw licenses of Abuja, 7 other Discos in 60 days]
Also according to the report, the Federal Government approved a loan of N213 billion for DisCos in 2014; the Federal Executive Council approved N701 billion in 2017, while FG also signed the release of N600 billion for the power sector which was reportedly meant for shortfall in the payment of monthly invoices by key stakeholders in the sector.
As earlier published on Nairametrics, the PwC recommended that the possible solution to the problem of liquidity crunch facing the DisCos was to start supplying 50% of distributable electricity to Nigerian companies. According to the report, this should be done provided the companies are willing to pay N80 per kilowatt while the remaining 50% can then be shared among residential consumers.
Appointments
Abbey Mortgage Bank announces appointment of 6 Directors
The Central Bank of Nigeria has approved the appointment of 6 Directors of Abbey Mortgage Bank.
Abbey Mortgage Bank has announced the appointment of 6 Directors, including Mr. Madu Hamman as the substantive Managing Director.
The disclosure is contained in a notification, signed by the Bank’s Secretary, Geoff Amaghereon Esq. and sent to the Nigerian Stock Exchange market today, as seen by Nairametrics.
What you should know
Five (5) other Directors were appointed by the CBN – 2 Executive and 3 Non-Executive Directors.
The names and portfolios of the Directors are; Mr. Mobolaji Adewumi – Executive Director; Mr. Oladipupo Ayodele Adeoye – Executive Director; Mr. Nonso Okpala – Non-Executive Director; Professor Marius N. Umego – Non-Executive Director; and Brigadier-General John Obasa (rtd) – Non-Executive Director.
The notice also mentioned that all appointments have been approved by the Central Bank of Nigeria.
Obituaries
Just-in: Diego Armando Maradona is dead
Argentine football star, Diego Armando Maradona is dead.
Argentine football star, Diego Armando Maradona is dead.
This was disclosed by the Premier League via its Twitter handle on Wednesday evening.
It tweeted, “We are deeply saddened to hear of the passing of footballing great, Diego Maradona, an extraordinarily gifted footballer who transcended the sport.
“Our thoughts and sincere condolences to Diego’s family, friends and those who knew him.”
He reportedly died of a heart attack on Wednesday at his home in the outskirts of Buenos Aires.
Maradona, 60, had recently battled health issues and underwent emergency surgery for a subdural haematoma several weeks ago.
We are deeply saddened to hear of the passing of footballing great, Diego Maradona, an extraordinarily gifted footballer who transcended the sport.
Our thoughts and sincere condolences to Diego’s family, friends and those who knew him. pic.twitter.com/qUyc5BJ1OD
— Premier League (@premierleague) November 25, 2020
Details soon …
Energy
FG to begin online registration, monitoring of petrol stations, depots
The DPR has stated that it will commence the remote monitoring, registration, and accreditation of all petroleum products depots.
The Department of Petroleum Resources (DPR) has revealed that it plans to automate and begin remote monitoring, registration, and accreditation of petroleum products depots, retail outlets, and the entire downstream oil and gas industry, with the launch of the newly established Downstream Remote Monitoring Systems (DRMS).
While disclosing a statement in Abuja, the Head, Public Affairs of the DPR, Paul Osu, pointed out that the newly established Downstream Remote Monitoring Systems is expected to take off on December 1, 2020, after the launch in Abuja.
READ: Nigeria’s 5,000 BPD refinery will produce 271 million liters of petrol every year
According to a report by Vanguard, Osu explained that the DRMS is a web-based solution designed to provide intelligent regulatory and inventory management system for petroleum products supply and distribution from depot to retail outlets and also as a regulatory tool to monitor retail outlets and depot activities.
He said, “Other features of the application include retail outlets accreditation and re-registration, nationwide automated product inventory management, retail outlets coordinate recording for mapping purposes and transactions management and report generation of dealers nationwide.
READ: NNPC says local operators must improve capacity to achieve low cost of oil production
“The establishment of DRMS is another strategic initiative of DPR to continue to create opportunities and enable business in the oil and gas industry in Nigeria.”
It can be recalled that the DPR had a few months ago, launched the National Production Monitoring System (NPMS), another online platform to assist the oil and gas regulator accurately monitor national crude oil production and exports, through the provision of a system for direct and independent acquisition of production data from oil and gas facilities in Nigeria
READ: House of Reps summon Emefiele, NNPC GMD over unremitted N3.24 trillion
This is to ensure timely and accurate reporting of production figures and export data. This is also expected to guard against the crude oil theft that is prevalent in Nigeria’s upstream oil sector or reported cases of crude oil that is sold but unaccounted for.
The NPMS is an initiative that is developed as a replacement for the current paper-based report and ensures ready production reporting to the Federal Inland Revenue Service (FIRS) and the Nigeria Extractive Industries Transparency Initiative (NEITI) and other agencies.
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