DisCos Tackle Minister Over Power Supply Claims

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DisCos Tackle Minister Over Power Supply Claims

DisCos Tackle Minister Over Power Supply Claims
February 27
13:02 2020

The Association of Nigeria Electricity Distributors (ANED) on Wednesday dismissed as untrue, the claim by Minister of Power Mamman Sale that electricity Distribution Companies (DisCos) evacuate only 3,000Megawatts (MW) out of the 7,000MW wheeled by the Transmission Company of Nigeria (TCN).

ANED which is the umbrella body of the DisCos said the TCN wheels a mere 4,303MW supplied to consumers.

The minister last week blamed on the Discos.

“Nigeria currently generates 13,000 MW of electricity, it transmits 7,000 to DisCos while the distribution companies can only distribute 3,000 megawatts to end users,”Sale told reporters.

But ANED,in absolving its members of blame in the worsening power supply in the country, stated that the quantum of power that DisCos supply to their customers is based on the allocation they get from the TCN.

The association restated in a statement that its members have till date not received a kobo from the Federal Government as subsidy. It reminded the government that even though DisCos liabilities to NESI is N81bn, MDAs owe them to the tune of N100bn.

ANED referred the minister to a review of the daily power report published by TCN’s National Control Centre (NCC) , Osogbo, Osun State, which shows that his claim on current wheeled megawatts of electricity was false.

The report, according to ANED, clearly indicates that the peak generation ever recorded in Nigeria is 5,375 MW, of which only 4,303 MW of energy are wheeled or transmitted by the TCN to its members.

It said that a further review, historically, shows that TCN has never wheeled or transmitted energy above 4,557 MW nor matched its transmission to any of the generation peaks to date.

The association added: “As such, references to TCN’s ability to transmitting ‘…7,000 to Discos…’ is inaccurate and misleading. TCN’s attestations of a transmission capacity of 8,100 MW is based on nothing more than a computer simulation and not tested, proven or practical capacity.”

ANED said the recent Siemens “Electrification Roadmap for Nigeria” report, May 7th, 2019 states ‘Today, power distribution by the DisCos to end-customers is limited by power in-feed from TCN.”’

The same report, according to the association, also states that the capacity of the “last mile (DisCos capacity) …is about twice as high as the peak supply delivered by the TCN to the respective distribution utilities (where the peak was 5.2 GW across all Nigeria in 2018).”

It said that a System Adequacy report authored by TCN’s Market Operator (July 2017), states that “transmission constraints frequently limited the power flows in the network.”

The ANED statement also made reference to the Nigerian Electricity Regulatory Commission (NERC) December 2019 TCN Minor Review Order which stateds inter alia: “…whereas the CAPEX provided to TCN in MYTO-2015 Order was to support the evacuation of the average projected generation of 5,465MW in 2016 to 10,493MW in 2019, actual average generation remained between 3,500MW to 4,OOOMW during the same period.”

The statement went on to add: “Maximum Available Capacity to Date for generation, indicated in the NCC report on the date (February 20, 2020) of the honourable minister’s comments was 7,652.2 MW. Thus, raising a question as to the basis for the minister’s reference to 13,000MW of generation.

“Indeed, of the available generation capacity, 1,500MW continues to be constrained by lack of gas, given that twenty-five (25) out of 28 generating plants are thermal plants that are fuelled by gas. Grid and hydro issues provide additional constraints to generation availability.

“In simple terms, the DisCos can only deliver the energy that is transmitted or wheeled to them by TCN, based on the amount generated.

“Of greater importance is the need, at a minimum, for a realignment of gas, generation, transmission and distribution capacities, that will provide the country with a level of consistent power supply.

“Any unsupported or inaccurate information amounts to deviation from this minimum and needless distraction from issues of sectoral urgency.

“That is what we are saying. Government cannot continue to subsidise because what they are doing is that they collect 3,000MW and pay for only 1,000MW. That is 15 per cent of what they are collecting. So, government is the one completing the payment.”

The association also disclosed that its members have till date not received a kobo from the Federal Government as subsidy.

“To date, the DisCos have not received any subsidy from the Federal Government. References to the N1.7 trillion in subsidies paid by the government are associated with payments that have been made to the generating and gas supply companies, under the Payment Assurance Guarantees (PAG) initiative and the Nigerian Electricity Market Stabilization Fund (NEMSF), ANED added.

The statement further said: “PAG is, principally, a result of government regulatory and policy interventionist initiatives that have resulted in the inability of the NESI value chain to recover the cost of doing business based, primarily, on tariffs that are non-cost reflective – an unmet critical commitment of the privatisation of the electricity distribution companies.

“As a matter of fact, NERC’s December 2019 Minor Review Order specifies Federal Government’s debt to the DisCos (correspondingly, the rest of the NESI value chain , due to tariff shortfalls of N1.728 trillion.”

“DisCo’s liability to NESI, due to market shortfalls, is N81 billion. Significantly, government Ministries, Departments and Agencies (MDA) owe the DisCos in excess of N100 billion, for energy consumed but not paid for – a Federal Government commitment, yet again, unmet under the privatisation agreement and MYTO-2015.

“Under the NEMSF N210 billion initiative, of the N189.1 billion that has been disbursed, the DisCos have only received N49.89 billion or 26.3%. Importantly, this is money owed to the DisCos by the consumers, due to the non-cost reflective tariff of MYTO 2.0 and the government’s failure to inject the associated N100 billion in subsidies, a commitment under the privatisation agreements.

“Interestingly, the rest of the NEMSF disbursement of N139.21 billion or 73.7% is comprised of the defunct Power Holding Company of Nigeria (PHCN)’s legacy gas and energy supply liabilities that should have resided with the Nigerian Electricity Liability Management Company (NELMCO).

“Unfortunately, these liabilities now constitute an encumbrance on the DisCos’ financial books, limiting or precluding their ability to access the financing that is critical for capital investment and injection of efficiency in the distribution of electricity – another violation of a privatisation commitment which required that the DisCos have debt-free financial books that would enable them access debt funding for their operations.

“A review of DisCos performance would indicate that the DisCos have improved their collection efficiency from 2017 (57.89%) to a high of 74.5% (Quarter 4, 2019), in spite of the issues of lack of access to financing and the related limited capital investment, as well the artificially suppressed electricity tariff.

“However, a discussion about DisCos remittances and collection efficiency would be incomplete without reference to regulatory and government policy inconsistencies and interventions that have distorted the ability of NESI to evolve organically.”

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