The indebtedness of power distribution companies to the Transmission Company of Nigeria has risen to N231bn as of March 2019.
Nigeria has 11 Discos. The electricity generated by power generation companies is transmitted by the TCN to power distributors, who then distribute the product to final consumers.
Discos collect funds from power consumers on behalf of other operators in the sector, but it was learnt on Sunday in Abuja that the indebtedness of the power distributors to TCN alone had risen to N231bn.
The managing director, TCN, Usman Mohammed, stated that this was why it had become vital to correct the mistake that was made during the privatisation process of the power sector.
“It is important we reset those distribution companies on the path of sustainability so that we don’t continue to put money in a company that doesn’t deliver as expected,” he stated.
Mohammed also explained that the N701bn, which the Federal Government provided to support generation companies for the payment of gas, was due to the fact that Discos were not remitting the required funds to the sector to pay power generators.
He said, “If the Discos are performing we would not have to put in all that money. So it is because the money from the Discos is not coming in to pay the Gencos that was why we had to put this kind of structure. For transmission, they (Discos) owe us N231bn as of March. The sum of N231bn is what the Discos owe us.”
On ways to reset the fortunes of the Discos, the TCN boss stated that there had been a push for the recapitalisation of the Discos, adding that this was also one of the ways to correct the mistake that was made when the sector was privatised.
The distribution and generation arms of the power sector were officially privatised in November 2013 when they were handed over to private investors to manage.
Mohammed said, “We are pushing for the recapitalisation of the Discos because we believe that we made a mistake in the process of privatisation and we believe that the mistake can only be corrected by the process of recapitalisation.
“Privatisation is the right thing because the government cannot sustainably invest in the power sector, but the point is that we implemented the right thing wrongly and so we need to correct that mistake. That is what we need to do as people.”
The TCN boss further noted that the over $1bn investments in transmission had not been adequately felt by power users because of the poor networks in the country’s electricity distribution arm.
He said, “The Nigerian people are not connected to our network. They are connected to the distribution network. So the Nigerian people in a way do not feel what we are doing. But the fact is that even our equipment is not guaranteed because there is no investment in the distribution network.