Fashola tackles Discos over debts

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,”

ALSO SEE: NERFUND in red over huge debts

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.

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 out rightly 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 shutdown due to a lack of funds to carry out maintenance.