About six weeks to the April 1, 2020 date for a new electricity tariff to come into effect in the country, the federal government has disclosed that it cannot continue to subsidise the power sector because electricity distribution companies (DisCos) have failed to make optimum use of the financial interventions.
Minister of power, Saleh Mamman disclosed this to State House correspondents after the Federal Executive Council meeting presided over by President Muhammadu Buhari at the presidential villa, Abuja, yesterday.
According to him , his ministry had submitted a memo to the Federal Executive Council (FEC) to decide the fate of electricity distribution companies that have failed to honour their commitments to buy and distribute adequate power generated for them by the generation companies (GenCos).
He explained that the DisCos do not evacuate all of the about 13,000 megawatts generated by the GenCos, and while 7,000 megawatts out of this is transmitted, the DisCos manage to eventually pay for only 15 percent of the 3,000 megawatts they are able to distribute.
The implication is 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 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.
When asked 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 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 are the losses – technical losses and commercial losses.
“They will give you power and may not collect your money or they will collect the money and pocket, or they may send power 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.
On what happens to the several financial interventions the government has made, he said,“ That is what we are saying; government cannot continue to subsidise because what they doing is that they collect 3,000 megawatts and pay for only 1,000 megawatts; that is 15 percent of what they are collecting, so government is the one completing the payment. 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 whoever is ready to come and invest. So we are asking government to review and see if they are capable, but if they are not capable, they should give way.
On how the government will address the debts between DisCos and GenCos, and between GenCos and Gas producers, he said, “Well, we have come up with a plan – the issue of willing buyer, willing seller. You know there is generated 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 percent? Even if NBET (Nigeria Bulk Electricity Trading Plc) is collecting 100 percent, gas alone is taking 60 percent, only 15 percent is used for their overheads.
“So if they cannot work outside the agreement with the NBET, you can see how they are struggling to get their money back. NBET 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 this gaps.
During his briefing, Water Resources minister, Suleiman Adamu, said he presented one memo seeking variation and augmentation of an ongoing project as part of efforts to continue working towards completing inherited and abandoned projects.
He said, “We brought this augmentation and variation for Tada Shonga Irrigation Project, which is sited in Shonga in Kwara State.
“The augmentation is for N6.9 billion, of course like I said, because of the variation, the variation includes 700 hectares increase, plus 2 megawatts solar power plant to replace the diesel power plant that was in the original design because, as you know, diesel is expensive now, so pumping will be unsustainable; the irrigation system will be unsustainable if we continue to rely on diesel.”
On his part, minister of state for works, Abubakar Aliyu said he presented a memo to the Council on the augmentation of Benin-Adumagbe-Igba-Akure Road in Edo and Ondo states.
“We have reviewed the contract from the original sum of N3,297,221,221.90 to N4,770,188,497, inclusive of VAT and tax, an increase of about N1.48 billion. It was further reviewed down through the processes of going to BPP to the total sum of N4,770,189,493. LEADERSHIP