The umbrella body of the 10 electricity Distribution Companies (DisCos), Association of Nigerian Electricity Distributors (ANED), on Wednesday, disclosed that its members will require N8.7billion to meet the Nigerian Electricity Regulatory Commission (NERC) remittance threshold.
This is even as it maintained that the remittance order requirement may affect DisCos operation and staff redundancy.
Recently, the NERC issued a notice of intention to cancel the licences of eight DisCos for failure to meet the expected minimum remittance threshold for the month of July 2019 billing cycle.
It explained that under the Power Sector Recovery Program(PSRP), DisCos were obligated to settle their market invoices in full as adjusted and netted off by applicable tariff shortfall approved by the commission.
It said that the minimum market remittance threshold for the DisCo was determined after deducting the revenue deficit arising from the tariff shortfall from the aggregate NBET and Market Operator(MO) market invoice.
However, ANED’s In a statement signed by its Executive Director, Research and Advocacy, Mr.Sunday Oduntan, said the DisCos will require a monthly amount of N725 million to meet the threshold of 35 percent remittance level set by NERC.
“To meet the new remittance expectations, DisCos will have to finance an average gap of N725 million per month (estimated at N8.7 billion per year), until increased collections bridge the gap,” it said.
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It explained that while the DisCos were expected to do a minimum remittance of N12.69bn (about 35%) for the July 2019 billing cycle from a total N35.79bn invoice from the Nigerian Bulk Electricity Trading Plc (NBET), the DisCos remitted N8.06bn.
While noting that the eight DisCos performed up to 23% of the 35% required of them for the month, it said the inability of the DisCos to meet the 35% threshold specified by NERC was due to the liquidity crisis in the power sector.
The DisCos to this end called on the National Assembly to intervene in the current liquidity crisis in the power sector, stressing that the Average Technical Commercial and Collection (ATC&C) losses have continued to increase.
“A situation further complicated by three (3) years of delayed Minor Reviews and non-payment of electricity bills by the Ministries, Departments and Agencies (MDAs)a
“Additionally, with over five decades of significant neglect of the sector, the massive investment that is required for the injection of efficiency that Nigerians desire continues to be undermined by inconsistent and uncertain policy and regulatory changes and undelivered privatisation commitments, the aforementioned representing strong disincentives to investors.
“The establishment of remittance threshold is good for NESI. However, realistic levels and timelines for DisCos to ramp up is key for sustainable compliance.”While the DisCos said they await a cost reflective tariff from NERC, they, however, said it takes time to increase collection level,” it stated.
It appealed to the Committee to intervene so that the current N600bn federal government power sector intervention goes beyond the year 2020 – “to cushion the effects of tariff hikes, allow investments to be injected by both TCN and DisCos, and to mitigate shortfalls to the Generation Companies (GenCos) and gas suppliers.”
ANED also urged NERC to amend the Remittance Order to ensure compliance and that electricity debts owed by MDAs, currently, in excess of N100 billion, be taken off or be discounted off the energy bills NBET provides to the DisCos.
According to the association, this will minimize the difference between current DisCo remittances and the NERC specified threshold.
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