Plan To Centralise Account By FG, Opposed by Power Firms

Plan To Centralise Account By FG, Opposed by Power Firms

The 11 electricity distribution companies in the country on Monday condemned the alleged plan by the Federal Government to escrow and centralise their revenue accounts over poor market performance with respect to their various monthly remittances to the Nigerian Bulk Electricity Trading Plc.

Speaking under the aegis of their umbrella body, the Association of Nigerian Electricity Distributors, the power firms said such a move would be a nationalisation of the 11 Discos privatised just three years ago.

The NBET had on several occasions published reports, as well as announced that the Discos remitted only about 30 per cent of their monthly energy invoices in 2016.

The Market Operator, an arm of the Transmission Company of Nigeria, also confirmed this after its Executive Managing Director, Mr. Moshood Suleiman, in October last year at a market participants’ workshop in Abuja, declared that if the poor revenue collection continued, the firms’ revenue accounts might be escrowed.

But ANED’s Director of Research and Advocacy, Mr. Sunday Oduntan, said in a statement issued in Abuja on Monday, “Any attempt to centralise or escrow the Discos’ revenue accounts will be tantamount to nationalisation or expropriation of the distribution companies.”

According to him, such an action is contrary to the objectives of the National Electricity Power Policy, 2001 and the Electric Power Sector Reform Act, 2005 of a private sector-owned and managed electricity sector.

“It will also send very wrong signals to domestic and international investors that Nigeria is not fully open for private sector investment and that we are still partial to the old habits of nationalisation, preventing the injection of the cheap and sorely needed capital that is critical to the rehabilitation and improvement of the electricity infrastructure,” Oduntan stated.

He said it would be improper to have a supposedly private sector-owned and managed business in which the government would seize control of its revenues.

ANED advised the Federal Government to avoid any consideration of regulations or action that would intrude into corporate responsibilities of procurement, financial management or personnel management.

“Relative to procurement, we are not aware that the Nigerian Communications Commission issues regulations to guide the internal procurement of the telecommunication companies; the Central Bank of Nigeria, that of the banks; or the Department of Petroleum Resources, that of the oil companies,” Oduntan added.

The power firms also said they learnt that the Federal Government was mulling a decision to call for the declaration of eligible customers for the electricity market.

“Such can be declared by the minister only when a competitive market exists in the Nigerian electricity supply industry,” Oduntan stated.

ANED, however, argued that such a competitive market, driven by efficiency, presence and utilisation of industry contracts, did not exist at the moment.

According to the association, the minister, under Section 27 of the EPSR Act, 2005, has the authority to determine end-user customers, who then constitute eligible customers.

But it noted that Section 28 of the Act required that the Discos must be compensated for any reduction in their ability to “earn permitted rates of return on their assets,” or any inadequacy in their revenues as a result of such determination.

The power firms, therefore, warned that any such move would have an effect on consumers.

“What this means is that consumers will have to suffer an increase in their electricity tariff to accommodate this premature declaration of eligible customers,” ANED added.

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