Connect with us
nairametrics

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.

Published

on

FG owes DisCos over N500 billion to electricity Subsidy - PwC 

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.

GTBank 728 x 90

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.

FG owes DisCos over N500 billion to electricity Subsidy - PwC 

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.

GTBank 728 x 90

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.

Fidelity ads

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.

Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Business

N4.16 billion unpaid lottery revenue recovered by EFCC

The EFCC has made a recovery of the sum of N4.16 billion for the government from lottery companies.

Published

on

Western Lotto

The Economic and Financial Crimes Commission (EFCC) has announced that it recovered over N4.16 billion for the government from lottery companies which they had refused to remit.

This was disclosed by the Acting Chairman. Mohammed Umar Abbah on Thursday evening, at the EFCC Headquarters during a meeting with Williams Alo of the Ministerial Task Force for recovery of unpaid revenues from lottery businesses.

The EFCC acting chairman said that the lottery companies were not forthcoming with remitting the revenue which had forced the anti-graft agency to intervene.

“We mapped out strategies which resulted in the recovery of over N1.16 billion from lottery companies, operating in Abuja with over N3 billion from their counterparts, operating in Lagos State,” he said.

He added that the EFCC would continue with its cooperation with the Federal Government to ensure lottery companies owing the Federal Government are made to cough out revenues they owe the government, which has already been handed over to the lottery trust fund.

GTBank 728 x 90

“Let me acknowledge the efforts of this Commission for the assistance it has rendered not only to the Federal Government of Nigeria but specifically to the lottery industry in Nigeria. It is in our record that the EFCC has assisted the lottery business in no small way, because a lot of recoveries have been made for us by the EFCC and the money recovered has always been handed over to the lottery trust fund,” Mr. Alo said.

Continue Reading

Business

Presidency denies building rail line from Nigeria to Niger Republic

The Federal Government has denied plans to construct a rail line stretching from the country into the Niger Republic.

Published

on

Fraud, FG

The Presidency has disclosed that the Federal Government is not constructing a rail line from Nigeria linking Kano-Dutse-Maradi into the Niger Republic, as it will only stop at the designated border point.

This follows the public outcry that greeted the Federal Government’s announcement of the rail project.

The disclosure was made by the Senior Special Assistant to the President on Media and Publicity, Garba Shehu, through a thread of tweets on his official Twitter handle on Thursday, September 24, 2020.

He revealed that, based on the agreement reached between Nigeria and Niger in 2015 for the Kano-Katsina-Maradi corridor masterplan, the 2 countries agreed to build a rail line to the border town of Maradi.

GTBank 728 x 90

In his statement, Garba Shehu said, “Nigeria isn’t building rail line into Niger, but only to the designated Border point. An agreement between Nigeria and Niger in 2015, coordinated by the Nigeria-Niger Joint Commission for Cooperation has a plan for ‘Kano-Katsina-Maradi Corridor Master Plan, (K2M)’ as it is called.

“Going by this, the two nations would each build a rail track to meet at the border town of Maradi. Nigerian delegates to that meeting comprised officials from the Ministry of Foreign Affairs, National Boundaries Commission, Federal Ministry of Industry, Trade & Investment, Ministry of Agriculture and Rural Development, Water Resources as well as those of Kano & Katsina states.”

Going further he said, “The objective of the rail is the harnessing of raw materials, mineral resources, and agricultural produce. When completed, it will serve domestic industries, and play the role of a viable transportation backbone to the West African subregion, starting with the neighboring Niger Republic, for their export and import logistic chain.”

GTBank 728 x 90

Nairametrics had earlier reported that the Minister for Transportation, Rotimi Amaechi, after the Federal Executive Council (FEC) meeting presided over by President Muhammadu Buhari, announced the approval of the total sum of about $1.9 billion, for the rail line contract and development of Kano-Katsina-Jibia that will terminate at Maradi rail line in the Niger Republic.

According to a media aide to the president, Ajuri Ngelale, the rail line is expected to connect the 3 states of Kano, Katsina, and Jigawa. It moves from Kano to Dambata, Kazaure, Daura, Mashi, Katsina, and terminating in Maradi, Niger Republic.

Continue Reading

Coronavirus

WHO says people with NCDs more vulnerable to severe COVID-19, lists how to prevent it

WHO reveals people with pre-existing Non-Communicable Diseases are more vulnerable to the coronavirus disease.

Published

on

WHO is concerned that vaccine hoarding could prolong pandemic, COVID 19: Facebook provides free Ads to help WHO combat Misinformation, COVID 19: Facebook supports WHO, provides free Ads to combat Misinformation, Coronavirus: WHO says Nigeria is among countries with highest cases, WHO warns countries against rushing to lift coronavirus restrictions, Covid-19: WHO lists conditions for relaxing restrictions

The World Health Organization (WHO) has revealed that people with pre-existing Non-Communicable Diseases (NCDs) appear to be more vulnerable to becoming severely ill with the coronavirus disease.

This was disclosed in a statement by the UN health agency on its twitter handle on Thursday, September 24, 2020.

The WHO, in its statement, listed some of those Non-Communicable Diseases to include:

  • Cardiovascular diseases like hypertension, persons who have had and are at risk for a heart attack or stroke
  • Chronic respiratory disease such as chronic obstructive pulmonary disease (COPD), which is a chronic inflammatory living disease that causes obstructed airflow from the lungs
  • Diabetes
  • Cancer

The WHO Director-General, Tedros Adhanom Ghebreyesus, disclosed that the coronavirus outbreak has shown why action on NCDs is important. He acknowledged that people with non-communicable diseases are especially at risk, which is made worse by disruptions to essential services.

He said, “The risk has been compounded by disruptions to essential services including diagnosis and treatment of cancer and diabetes and other non-communicable diseases.”

GTBank 728 x 90

He pointed out that the health services gaps are not just in treatment and care, as he said all nations still have much more to do to prevent NCDs. He said that too many people are dying from preventable diseases that are mostly preventable.

The WHO boss revealed that to prevent and control these non-communicable diseases, one has to stop tobacco use, reduce the use of alcohol, cut salt intake, consume less sugar, increase physical activity, eliminate industrial trans-fats, and treat high blood pressure.

He said that all these interventions are part of WHO’s best buys in a set of 16 most attractive ways to save lives and save money.

GTBank 728 x 90

Continue Reading
Advertisement
Advertisement
Advertisement
ikeja electric
Advertisement
Patricia
Advertisement
FCMB ads
Advertisement
IZIKJON
Advertisement
Fidelity ads
Advertisement
first bank
Advertisement
bitad
Advertisement
deals book
Advertisement
financial calculator
Advertisement
deals book
Advertisement
app
Advertisement