FG Blames Discos For Non-Remittance Of Revenue

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Federal Government has blamed its plummeting revenue in power sector on Electricity Distribution Companies (DISCOs) inability to collect and remit same into its coffers.

In ‘Nigeria Power Programme, NPP’ StraightNews quoted from The Vanguard newspaper, the report lamented that the government is facing huge revenue losses, and that country’s long-term sustainability in the power sector would depend on the capacity of DisCoS to remit revenue.

The report revealed that “A review of 2015 – 2016 data on cash remittances from DisCos to Nigerian Bulk Electricity Trading PLC (NBET) shows that DisCos have not made full payment for energy received since the transfer of management in 2013, and they have retained a lot more of collected revenues than allowed under MYTO.”

According to it, “DisCos have increasingly retained more of collected revenues in 2016 compared to 2015. In 2016, DisCos achieved a collection rate of 57% from their customers, and, on average, settled only 29% of invoices issued by NBET”, it stated.

The report stated that weighted average ATC&C losses for 2016 are 54.3 per cent versus 32.1 per cent MYTO projections, observing that “It is critical that DisCos are held accountable to the baseline performance benchmarks in line with the Performance Agreements targets agreed in order not to reward inefficient operators.

“However, it is also noted that the government and regulator’s actions have materially impacted the performance of some of the more efficient DisCos, especially in relation to the tariff review.”

Analysis indicates that DisCos have significant funding requirements to support their respective business plans as well as attain the contractual targets in the Performance Agreements. The most notable driver of this funding requirement is network improvements and expansion.

“Network improvement is important to ensure and maintain the integrity of the existing infrastructure and improve distribution efficiency while network expansion is required to support both the on-going and proposed investments in the transmission and generation segments of the value chain”, the report said.

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MeanwhileFederal Government has revealed that annual capital expenditure of DisCos  (2014-16) was US$104 million against US$301 million while under spending US$ 198 million under Multi-Year Tariff Order (MYTO) allowance.

Specifically, the government blamed DisCos for being responsible for the current high Aggregate Technical, Commercial and Collection (ATC&C) losses in the sector, maintaining that the financial condition of the power sector’s value chain depends on DisCoS’ ability to sell energy and collect revenue from customers.

The report further stated that the revenue collected by DisCos should cover DisCos own approved costs, generation costs, transmission costs, regulatory charges, the bulk trader charges, and the cost of ancillary services.