- Mulls reversal of Electricity Privatisation
THE Federal Government yesterday said that Distribution Companies, DISCOs have failed in electricity supply to Nigerian consumers. The government said it will no longer provide intervention funds as a subsidy to the DISCOs and may take drastic actions against the companies as it would not continue to subsidise the companies without commensurate result.
The Federal Government concern is that the DISCOs have consistently failed to efficiently make use of the financial intervention in electricity supply.
The Minister of Power, Saleh Mamman, disclosed this while briefing State House correspondents at the end of the Federal Executive Council, FEC, presided over by President Muhammadu Buhari at the Council Chamber, Presidential Villa Abuja.
He said that his Ministry submitted a memo to the council to decide the fate of electricity distribution companies (DISCOs) that have failed to honour their commitments to buy and distribute adequate power generated for them by the generation companies (GENCOs).
The Minister, who was flanked by the Minister of State for Power, Prince Jeddy Agba, said although Nigeria’s current generating capacity is about 13,000 megawatts, about 7,000 megawatts is transmitted.
He explained that the DISCOs do not evacuate all of the 7,000 megawatts generated by the GENCOs, but pay only 15 per cent for the 3,000 megawatts they eventually distribute. He said the implication was technical-economic losses as the GENCOs don’t get value for the electricity they generate and the end consumers also do not get adequate electricity supply despite the output of the GENCOs, the Minister said.
Although he declined to give details of his recommendations to FEC, Hassan stressed that in view of the situation, the DISCOs may have to quit and give way to more capable operators if they are not able to fulfil their obligations as agreed with government.
The minister said the companies must show that they have the capacity to supply electricity to Nigerians or leave, so that those who can do it would be engaged.
According to him, “We presented achievements right from the day we took oath of office to date. We want to tell Nigerians what we achieved in the value chains. Nigeria can generate up to 13,000 megawatts of electricity but we cannot transmit all.
“So today we presented to the council the solution to the problem of our generation. It is mainly distribution. We can transmit, we can generate 13,000 megawatts, and we transmit 7,000 megawatts but can only distribute 3,000.
“There is a lot of work to be done in transmission companies and the government is now willing to take up the matter immediately.”
Asked on what government has resolved to do, he said, “What I want to say is that most of the problem we are facing in this country that we cannot get electricity supplied adequately and efficiently is because we have a problem in distribution.
“Generation is no more problem. We can generate up to 13,000 megawatts but the transmission, those who are taking the electricity supply can only take 7,000 megawatts, even at that they are not taking the whole 7,000 megawatts but only 4,500 megawatts and then send to distribution.
“The distribution, in turn, receives only 3,000 megawatts. Because of the technical and commercial reasons, they cannot contain the whole power that has been generated. “So, we have to correct the infrastructure. That is why I said that today, I submitted my observation to the council and I believe the government is on it.
One of the things I will tell you is that the government has signed a memorandum of understanding with the German government, Siemen. “They are to align between distribution and transmission and also generation so that at the end of the day if we generate 13,000 megawatts, the transmission will take the whole 13,000 and will distribute same, that way Nigerians will be happy and everyone will have 24/7 electricity supply.”
On what will become of the DISCOs, he said, “The DisCos are the ones manning the distribution, that is why I have submitted my observations to the government, it is left for the government that will have to decide. “We just have to sit and see whether they are capable, have the technical know-how because most of the problems we are having today is the loss- technical loss and commercial loss.
“They will give you light and may not collect your money or they will collect the money and pocket, or they may send light and you may not have good sub-station that may collect this power and distribute to customers. This has been our major problem and it is the responsibility of the DisCos to take care of that end.”
Further asked on what will happen to the several financial interventions the government has made, the Minister said, “That is what we are saying, government cannot continue to subsidize because what they are doing is that they collect 3,000 megawatts and pay for only 1,000 megawatts, that is 15 per cent of what they are collecting. “So, the government is the one completing the payment. So, we cannot continue like that. So, if they are ready to continue, fine but if they are not ready to continue maybe they should give way to whomever that is ready to come and invest. So we are asking government to review and see if they are capable fine but if they are not capable they should give way.”
Fielding question on how the government would address the debts between DisCos and GenCos, between GenCos and Gas producers, he said that there was a plan on that. He said: “Well, we have come up with a plan, that issue of willing buyer, willing seller. You know there is the ardent capacity of generating electricity that we cannot pick at all.
So we are now asking the GenCos…you can imagine we are only paying them 15 percent out of 100 so where do we take the remaining 85 per cent. “Even if embet (Nigeria Bulk Electricity Trading PLC) is collecting 100 per cent, gas alone is taking 60 per cent, only 15 per cent is used for their overheads. So if they cannot work outside the agreement with the embet you can see how they are struggling to get their money back. “Embet buys electricity from DisCos, supplies to GenCos and collect money from DisCos and pay the GenCos, that is why we have the gaps and that is why we have to do something to correct these gaps. Now it is the government’s decision.”