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Power firms fail payment obligations, shun 100% TEM rule

..Settle only 29% in first 9-month of 2017  In spite of measures to end the financial constraints in the power sector, records have shown that…

..Settle only 29% in first 9-month of 2017 

In spite of measures to end the financial constraints in the power sector, records have shown that the problems persist as the 11 distribution firms recorded outstanding N269.3 billion debts for energy allocation in the first nine months of 2017.

The Daily Trust analysis of payment records for energy invoices and performances posted by the Nigeria Electricity Bulk Trading Plc (NBET) showed 29 per cent average payment of N108.3bn was made by the 11 Distribution Companies (DisCos) from a cumulative N377.6bn invoice.

NBET is an agency in the power sector that intermediates between the about 25 GenCos and the 11 DisCos. It obtains monthly energy invoices of GenCos as raised by another agency, the Market Operator (MO) of the Transmission Company of Nigeria (TCN), collects the month’s revenue the 11 DisCos had drawn from the residential, commercial industrial customers by way of electricity bill payments. 

The sum remitted by the DisCos to NBET is expected to be equivalent at 100 per cent to the energy invoice figures from the GenCos to sustain the operation of the electricity market as mandated by the Transition Electricity Market (TEM) rule and the Multi Year Tariff Order (MYTO) 2015 set by the Nigerian Electricity Regulatory Commission (NERC). 

Despite the TEM activation since 2015, the privatised distribution firms have yet to meet up to 80 per cent monthly payment since they took over the business on November 1, 2013, the remittance records at MO and NBET show. 

It degenerated to an average 30 per cent since 2016 with Port Harcourt, Kano and Yola DisCos making zero remittances in six months of the review period. While P/H DisCo missed remittance for July and September, Kano DisCo missed for June, July and September. Yola DisCo did not remit for six months; it remitted only for January, February and May at 25 per cent average.

 On the average performance in terms of monthly remittances of energy payments, Eko DisCo led the top performers. Ikeja DisCo came second place, Ibadan DisCo was third and Benin Disco occupied the fourth place, the analysis revealed.  

Yola DisCo now operated by the federal government however led the worst performers with Kano DisCo occupying the 10th position.

The middle performers were Enugu DisCo at the fifth, Abuja DisCo occupied the sixth place, Port Harcourt DisCo was at the seventh position; the eighth position was occupied by Kaduna DisCo, and Jos DisCo took the ninth position.

Analysis of the data showed the trend of performance was best in February 2017. This was when average electricity generation was at 3,500MW. 

 It was worse for the months of July and September even when generation was high around 4,000MW in July, and over 4,000MW in September, generation data from the Transmission Company of Nigeria (TCN) indicated.

71% energy receipts from GenCos constrained 

From the GenCo type analysis, the three hydropower GenCos – Kainji, Jebba and Shiroro posted N62.4bn as invoice for January to September. They however received N18bn as payment from the DisCos, which was just 29 per cent remittance level. 

The 20 gas-fired (thermal) GenCos that operated in the period posted N315.2bn invoice, the record showed. The stations’ operators received N90.2bn, an approximated 29 per cent of their invoices for nine months of 2017.

Result of the analysis noted that 71 per cent of the energy revenue expected from the DisCos was constrained in the first nine months of 2017.

Showing instance of the gap in the GenCos’ invoices and their payments from the DisCos the data analysis shows that three of the overall top GenCos group including Ughelli, Egbin and Okpai stations posted N128bn but received only N37.2bn, representing 29 per cent of the invoice figure.

Three of the overall lowest GenCos’ group comprising Ibom Power, Trans Amadi and Afam IV-V posted N5.8bn and received N1.6bn; it represented 28 per cent of its receipt.

The NBET manages a N701bn Payment Assurance Guarantee (PAG) fund obtained from the Central Bank of Nigeria (CBN). After the DisCos’ 30 per cent remittance, the fund guarantees up to 50 per cent additional payment to the GenCos every month staring from January 2017 and ending by 2019.

Our analysis shows that out of the DisCos’ N269.3bn outstanding debts from the N377.6bn GenCos’ invoices, the payment assurance fund guarantees about 50 per cent payment which would be an estimated N188.8bn for the nine month period under review.

 The Managing Director of Mainstream Energy Solutions Ltd, Engr. Lamu Audu in December had acknowledged the intervention through PAG but urged government to find ways of accommodating the 20 per cent deficit.

Recently, the Managing Director of the Niger Delta Power Holding Company (NDPHC), Mr Chiedu Ugbo said but for the payment assurance fund, the power sector would have collapsed. 

He noted that the fund so far has helped GenCos paid for gas supply and other essential services which resulted in improved electricity generation. The Daily Trust reports that the highest peak electricity generation of 5,222MW attained on December 18, 2017.

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