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TCN pushes for DisCos’ recapitalisation

Some of the eleven power distribution companies (DisCos) operating in Nigeria might be forced out of the power sector by TCN 2020 objective.

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TCN to use recapitalisation to force some DisCos out of power sector, TCN explains why system collapse is here to stay 

Going by the Transmission Company of Nigeria’s (TCN) 2020 objective, some of the 11 electricity distribution companies (DisCos) operating in Nigeria may be forced out of the industry. TCN has pushed for the recapitalisation of DisCos to separate the wheat from the chaff in the new year.

The transmission firm plans to restructure the capital base of the distribution companies operating in the country.

The power sector in Nigeria was privatised in 2013 and the supply of the electricity was divided into several categories: six generation companies; 12 distribution companies covering all 36 Nigerian states, and a national power transmission company.

TCN to use recapitalisation to force some DisCos out of power sector 

Usman Mohammed, MD, TCN

Why it matters: Since the power sector was privatised by the Goodluck Jonathan administration in 2013, the electricity supply hasn’t improved much, and every business continues to provide electricity for themselves mostly with petrol and diesel generators.

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The Managing Director of TCN, Usman Mohammed, was of the opinion that the distribution companies within the country were not effectively disbursing their responsibility, so recapitalisation would improve their operation.

He said the capacity to duly supply electricity efficiently was lacking among the power distribution companies. Mohammed also opined that the recapitalisation of the power sector would attract investors to boost development.

[READ ALSO: Power: FG signifies financial commitment to Siemens agreement(Opens in a new browser tab)]

“We are working to see that all the projects that we have under the Transmission Rehabilitation and Expansion Programme will pick up and they will continue to be implemented in a sustainable manner.

“We are going to actually push for the recapitalisation of Discos in 2020. We believe that by doing that we are pushing the power sector to sustainable growth and development. The power sector has to attract investments.”

“The only way we can attract investments is to ensure that the power sector is sustainable. This means that every party is working and the regulator provides what is called a cost-reflective tariff consistent with the position of ECOWAS.”

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Mohammed also stated that “So we need to recapitalise the Discos for them to have commensurate investments to fix their networks and provide meters so that they can reduce the Average Technical and Commercial losses in their system for electricity to work.”  

[READ ALSO: Enyimba Economic City: A tale of N500 billion and 625,000 jobs(Opens in a new browser tab)]

TCN not waiting for DisCos: In his statement reported by Punch, Mohammad said TCN would continue to expand the grip without waiting for improvement and development in DisCos’ operation.

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“If you look at the current situation that we are now, of course, the transmission will continue to expand. We will not wait for the Discos. It takes a long time to build a transmission infrastructure than Discos’, which is easier. Therefore, we are looking at transmission as the enabler.

“Out of the 738 interfaces that we have with the Discos, only 421 have protection on their side, the remaining 317 do not have protection on the side of the Discos. This means faults in the houses of people can easily hit the TCN transformers and damage them.”

FG owes DisCos over N500 billion to electricity Subsidy - PwC 

FG needs to stop funding power: According to Mohammed, the government can’t afford to keep funding certain operations of the power sector.

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“The industry can only work when all the players are working. If transmission doesn’t work, it will bankrupt generation and distribution.

“If distribution doesn’t collect the money, nobody gets money and this means the government has to continue to finance generators through payment assurance. But for how long are we going to continue to do that? So we have to fix distribution.”

Gains and pains of recapitalisation: The recapitalisation plan shows that TCN doesn’t believe the current distribution companies can deliver on the needed improvement of the electricity supply. However, despite the good intention of the exercise, it might force some companies which are unable to meet the requirement out of the market.

 

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Olalekan is a certified media practitioner from the Nigerian Institute of Journalism (NIJ). In the era of media convergence, Olalekan is a valuable asset, with ability to curate and broadcast news. His zeal to write was developed out of passion to shape people’s thought and opinion; serving as a guideline for their daily lives. Contact for tips: [email protected]

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Business

Lagos announces additional tax incentives for businesses, individuals

Waiver of penalty for late payment of liabilities under PAYE that were due during the period when the state was under lockdown.

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LIRS further extends deadline for filing annual return by one month

The Lagos State Government has announced additional tax incentives and reliefs for businesses and individuals in the state, as part of measures aimed at reducing the burden on taxpayers amid the COVID-19 pandemic.

The disclosure was made in a public notice issued by the Lagos State Internal Revenue Service (LIRS) and signed by its Executive Chairman, Ayodele Subair.

The additional tax incentives are part of the several measures implemented by the LIRS to mitigate the impact of the coronavirus pandemic on taxpayers in Lagos and ensure business continuity.

The government had earlier given 3 months extension of deadline for filing annual returns from March 31 to June 30, 2020.

The additional measures being implemented by the state government include:

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  • LIRS shall be allowing on a case by case basis, the payment of outstanding liabilities in instalments to ease cash flow challenges that may affect taxpayers.
  • Waiver of penalty for late payment of liabilities under PAYE that were due during the period when the state was under lockdown (March-May 2020).
  • Waiver of penalties due on late filing of 2020 annual tax returns (Form A).
  • Waiver of interest and penalty components of outstanding tax audit liabilities from 2009 to 2015 for entities that present and keep to a structured payment plan that terminates on or before December 31, 2020.
  • Grant of tax credits of 20% of cash and kind donations made for COVID-19 by resident individuals to Lagos State Government for the 2021 Year of Assessment only subject to a cap of 35% of tax due.
  • Increase of payment channels to make payment of taxes easier, simpler and more convenient for all.
  • Adopting of video conferencing as the default mode for conduct of Tax Audit Reconciliation Committee (TARC) meetings in consonance with social distancing advisories from Government and other relevant authorities.

The Lagos state government expressed hope that all residents of the state would take advantage of these palliatives and reciprocate the government’s kind gestures by discharging their civic responsibilities by promptly paying their taxes and levies to the state.

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Jumia sees competition from startups in growing African e-commerce market

Investors have experienced a couple of twists and turn since the stock debuted in New York.

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Q3 ’19: Jumia grows revenue by 52%, Five gone, more to follow as Jumia shuts down Tanzania operation for 2022 projection 

One of Africa’s leading e-commerce firms, Jumia Technologies AG, is facing a new set of competition from startups in the Africa e-commerce and logistics market, after the coronavirus pandemic increased the demand for online deliveries.

The Co-Chief Executive Officer of Jumia, Sacha Poignonnec revealed that the restrictions and lockdown, which were implemented by various countries as part of measures to contain the spread of the coronavirus, have attracted more entrepreneurs into the e-commerce business. He, however, demonstrated good sportsmanship, saying:

“Greater competition is to be welcomed, given there are still so few people in the region that transact online. I would rather grow the market than just try to take everything.’’

READ MORE: Chelsea Football Club owner sells gold mining stake for $1.4 billion

Nairametrics had reported that Jumia reported a loss after tax of 37.6 million euros (N17 billion) in the second quarter of 2020. E-commerce firms were expected to be one of the major beneficiaries of the coronavirus pandemic as consumers, during the lockdown, moved towards online transactions to meet their essential needs.

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However, the losses were an improvement on the 66.7 million euros that was reported for the corresponding period in 2019. Apparently, the firm is trying to dig itself out of a massive loss hole.

The Lagos-based online market place, which is listed on the New York Stock Exchange, was one of the pioneers of internet trading in sub-Saharan Africa. Unfortunately, the company’s performance falls behind that of its peers around the world due to various challenges ranging from poor internet connection to now competition.

READ ALSO: PZ Cussons relaunches soap brand in desperate bid to re-capture market

Jumia investors have experienced a couple of twists and turns since the stock debuted in New York last year. Allegations of corruption, persistent losses in the Nigerian business and a damning short-seller report contributed to an initial share-price slump. But the coronavirus outbreak has helped to greatly increase market value this year.

It was reported earlier that one of the early investors in Jumia, MTN Group Ltd, was considering selling its stake in the business. Reacting to this, Poignonnec disclosed that Jumia may offer MTN’s shares as part of a potential new equity offer within the next 3 years if the Johannesburg-based firm decides to sell.

READ MORE: COVID-19: Virgin Atlantic files for bankruptcy

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He also revealed that expanding into food delivery business has helped to increase Jumia’s sales and footprint in its African markets, which are led by Nigeria. This includes grocery and pharmacy orders as well as restaurants takeaways.

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The logistics business unit of Jumai is another revenue stream as it is also now open to third parties who wish to use the firm’s network of drivers to deliver packages.

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Ride-hailing: Lagos reduces operational license fee by 20%, as operators meet with Governor

In the meeting with the Governor, all parties agreed to newer resolutions.

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COVID-19: Lagos State to begin curfew on Sunday to disinfect metropolis, Lagos state government discharges 7 more coronavirus patients, Lagos state will reverse to full lockdown, Sanwo-Olu to virtually inaugurate projects as he presents scorecard of first year in office, Lekki regional road: Sanwo-Olu revokes land titles of Elegushi Royal family

The Lagos State Government has reduced the operational license fee placed on ride-hailing companies operating in the state by 20%.

The decision was taken during a stakeholders’ meeting with the State Governor, Babajide Sanwo-Olu on Friday.

Governor Sanwo-Olu’s media aide, Jubril Gawat, who disclosed the outcome of the meeting, also noted that it was attended by operators like Uber, Bolt, and BMP among others.

READ MORE: NIPOST’s new charges could have ruined the e-commerce/logistics industry

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The Backstory: Earlier this week, the Lagos State Government had announced new guidelines designed for ride-hailing operations in the state. According to the new regulatory framework by the state which will take effect from August 20, 2020, ride-hailing companies were required to pay the Lagos State Government a 10% service tax on each transaction.

The new guidelines required operators to pay a provisional license fee of N10,000,000.00 for every 1000 cars in their unit and N25,000,000.00 for every unit above 1000 cars. Annual renewal of the license would cost N5,000,000.00 for every unit of 1000 cars and N10,000,000.00 for units with over a thousand cars in operations.

The guidelines also required that the vehicles must be brand new or within the first three (3) years of its manufacture as specified by the manufacturer.

READ MORE: OPay reacts to office shutdown, N25 million license fee 

Now, during the meeting with the Governor, all parties agreed to newer resolutions which are:

  1. There must be comprehensive insurance cover which will cover drivers and passengers.
  2. A reduction of 20% on the operational licensing fees.
  3. A flat fee of N20 to be known as Road Improvement Fund which will be levied on each ride/trip.
  4. A 90-day compliance with documentation for the drivers – There will be a one-stop shop for all the documentation (especially LASSRA Card- Lagos State Resident Registration Agency.
  5. E- Hailing companies to work with various bodies in the business for a good relationship.
  6. There MUST be due diligence and background checks on all drivers.
  7. Riders should desist from offline trips and transactions.
  8. E-Hailing Firms must make necessary data available to the Govt.

Mr. Gawat also noted that media reports about operators being required to only use cars that are not more than 3 years are incorrect. Instead, the rule only applies to Corporate Cabs.

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“This has nothing to do with the E Hailing business,” Gawat said.

On the requirements for sharing data, the Lagos state government said that data shared would be encrypted, and the personal information of ride sharers would not be disclosed.

READ MORE: 4 key points in the new Lagos 2020 Land Use Charge

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“This will help Government clear up issues around congestion & also calculation for the charge paid to Government,” he added.

Uber had earlier told Nairametrics, after the guidelines were released, that it was willing to engage the government on regulations to ensure “our operations align with best practices locally and internationally.

“We have always been willing to engage with governments on regulations to ensure our operations align with best practices locally and internationally, as we believe regulations need to support innovative technology ideas that fit 21st-century businesses.

“The current proposed regulations are inconsistent and unclear. We are working to better understand how they will impact the future of our business and network of driver-partners. We will give an update in due course,” Uber said.

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The meeting with the governor was needed, as clarifications were required on the execution of the guidelines.

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