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Power: Gencos Back Plan to Monitor Discos’ Accounts

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Minister of Power, Works and Housing, Mr Babatunde Fashola
  • Gencos Back Plan to Monitor Discos’ Accounts

Power generation companies in the country on Tuesday declared their support for plans by the Federal Government to centralise and escrow the accounts of the electricity distribution companies.

The Gencos also expressed reservation about claims by the Discos that many consumers across the country hardly pay their electricity bills.

They stated that the failure of the Discos to make the remittances of funds required for the smooth running of the Nigerian electricity supply industry had made the generation firms to be highly indebted to their lenders and had forced about 23 power plants to remain idle.

The debt to the lenders, according to the Gencos, is currently over N500bn, adding that most of the financial institutions that granted credit facilities to the power firms had started threatening them.

Last week, the 11 power distribution companies in the country opposed plans by the Federal Government to centralise and escrow their revenue accounts over poor market performance with respect to their remittances to the Nigerian Bulk Electricity Trading Plc.

The Association of Power Generation Companies, however, blasted the distribution companies for not wanting the government to see their books, whereas they often come out to complain that they were not making profits due to the refusal of consumers to pay electricity bills.

“This must not be allowed to continue, because the poor remittance of market funds by the Discos has prevented the rest of the electricity value chain from meeting up with their operations and also service their liabilities, which includes gas payments,” the Executive Secretary, APGC, Dr. Joy Ogaji, told journalists in Abuja on Tuesday.

“With the dwindling commercial performance in the industry and the inability of some stakeholders in the power sector to meet up infrastructure performance targets due to the decline of market funds and its attendant increased debt profile in the entire value chain of the power sector, the recent development of the Nigerian Electricity Regulatory Commission to escrow the account of the Discos is not just a welcome development, but also a wake-up call to all participants in the electricity market,” she added.

The NBET had repeatedly stated that the distribution companies remitted only 30 per cent of their monthly energy invoices in 2016.

The Executive Managing Director, Market Operator, an arm of the Transmission Company of Nigeria, Mr. Moshood Suleiman, had stated in October last year that if poor revenue collection by the Discos continued, their accounts might be escrowed.

Ogaji explained that in the power value chain, the Gencos were entitled to 60 per cent of funds remittances as they were not just to generate power, but also to pay for gas supply and gas transportation.

She said, “Transmission charge costs 11, per cent, distribution gets 25 per cent, while the remaining four per cent is meant for regulatory charges and the NBET. The revenue referred to by the distribution companies is not their personal revenue but market funds to which they were made trustees to collect and remit.

“But if the trustees can no longer be trusted, then their books must be made open or the accounts escrowed in order to enable us see if what they claim is actually what obtains in the power business, because this entire system is a value chain.

“If centralising the payment system is tantamount to nationalising, the question that comes to mind is: what does selling the electricity and keeping the money all to oneself mean? If the Discos claim they are not collecting enough, then they should open their books to make it plain for all to see and confirm their story. He who asserts must prove.”

The APGC executive secretary stated that the stance of NERC and the Federal Government would send positive signals to potential investors as well as investors in power generation.

When asked of the N701bn recently approved for the Gencos by the Federal Government, Ogaji said the power firms had yet to access the fund and that they did not really understand how it would be used.

She said, “The N701bn is for services to be provided between 2017 and 2019. It doesn’t cover the over N500bn debt owed the Gencos by the sector, which has made our lenders to threaten us. And it is important to state that we were not consulted before the government arrived at that N701bn figure.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Electricity Consumers Get 611,231 Meters Under MAP Scheme

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Electricity Consumers Get 611,231 Meters Under MAP Scheme

A total of 611,231 meters have been deployed as at January 31, 2021 under the Meter Asset Provider initiative since its full operation despite the COVID-19 pandemic and other extraneous factors, the Nigerian Electricity Regulatory Commission has said.

NERC disclosed this in a consultation paper on the review of the MAP Regulations.

The proposed review of the MAP scheme is coming nearly four months after the Federal Government launched a new initiative called National Mass Metering Programme aimed at distributing six million meters to consumers free of charge.

“The existence of a huge metering gap and the need to ensure successful implementation of the MYTO 2020 Service-Based Tariff resulted in the approval of the NMMP, a policy of the Federal Government anchored on the provision of long-term low interest financing to the Discos,” NERC said.

The commission had in March 2018 approved the MAP Regulations with the aim of fast-tracking the closure of the metering gap in the sector through the engagement of third-party investors (called meter asset providers) for the financing, procurement, supply, installation and maintenance of meters.

It set a target of providing meters to all customers within three years, and directed the Discos and the approved MAPs to commence the rollout of meters not later than May 1, 2019.

But in February 2020, NERC said several constraints, including changes in fiscal policy and the limited availability of long-term funding, had led to limited success in meter rollout.

NERC, in the consultation paper, highlighted three proposed options for metering implementation going forward.

The first option is to allow the implementation of both the NMMP and MAP metering frameworks to run concurrently; the second is to continue with the current MAP framework with meters procured under the NMMP supplied only through MAPs (by being off-takers from the local manufacturers/assemblers).

The third option is to wind down the MAP framework and allow the Discos to procure meters directly from local manufacturers/assemblers (or as procured by the World Bank), and enter into new contracts for the installation and maintenance of such meters.

“Customers who choose not to wait to receive meters based on the deployment schedule of the NMMP shall continue to have the option of making upfront payments for meters which will be installed within a maximum period of 10 working days,” NERC said.

The regulator said such customers would be refunded by the Discos through energy credits, adding that there would be no option for meter acquisition through the payment of a monthly meter service charge.

“Where meters have already been deployed under the meter service charge option, Discos shall make one-off repayment to affected customers and associated MAPs. Such meters shall be recognised in the rate base of the Discos,” it added.

NERC urged stakeholders to provide comments, objections, and representations on the proposed amendments within 21 days of the publication of the consultation paper.

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Economy

Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

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Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

Nigeria is moving in the right direction economically but its movement is not fast, the United Nations stated on Thursday.

Deputy Secretary-General of the United Nations, Amina Mohammed, said this during a meeting at the headquarters of the Federal Ministry of Industry, Trade and Investment in Abuja.

She said the challenges in Nigeria were huge, its population large but described the country’s economy as great with lots of opportunities.

The UN scribe stated that after traveling by train and through various roads in the Northern parts of Nigeria, she discovered that the roads were motorable, although there were ongoing repairs on some of them.

Mohammed said, “This is a country that is diverse in nature, ethnicity, religious backgrounds and opportunities. But these are its strengths, not weaknesses.

“And I think the narrative for Nigeria has to change to one that is very much the reality.”

Speaking on her trips across parts of Nigeria, she said, “What I saw along the way is really a country that is growing, that is moving in the right direction economically. Is it fast enough? No. Is it in the right direction? Yes it is.

“And the challenges still remain with security, our social cohesion and social contract between government and the people. But I know that people are working on these issues.”

She said the UN recognised the reforms in Nigeria and other nations, adding that the common global agenda was the Sustainable Development Goals.

Mohammad commended Nigeria’s quick response to the COVID-19 pandemic, as she expressed hope that the arrival of vaccines would be the beginning of the end of COVID-19.

On his part, the Minister of Industry, Trade and Investment, Adeniyi Adebayo, told his guest that the Federal Government was working hard to make Nigeria the entrepreneurial hub of Africa.

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N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

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petrol Oil

N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

Nigeria spent a total of N10.7tn on fuel subsidy in the last 10 years, the Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, has said.

Oyebanji, who was the guest speaker at the 18th Aret Adams Lecture on Thursday, said N750bn was spent on subsidy in 2019.

He highlighted the need for a transition to a market-driven environment through policy-backed legislative and commercial frameworks, enabling the sustainability of the downstream petroleum sector.

“Total deregulation is more than just the removal of price subsidies; it is aimed at improving business operations, increasing the investments in the oil and gas sector value chain, resulting in the growth in the nation’s downstream petroleum sector as a whole,” he said.

The managing director of 11 Plc (formerly Mobil Oil Nigeria Plc) said steps had been taken, “but larger and faster leaps are now required.”

According to him, deregulation requires the creation of a competitive market environment, and will guarantee the supply of products at commercial and market prices.

“It requires unrestricted and profitable investments in infrastructure, earning reasonable returns to investors. It requires a strong regulator to enable transparency and fair competition among players, and not to regulate prices,” Oyebanji said.

He noted that MOMAN had recently called for a national debate by stakeholders to share pragmatic and realistic initiatives to ease the impact of the subsidy removal on society – especially on the most vulnerable.

He said, “A shift from crude oil production to crude oil full value realisation through deliberate investment in domestic refining and refined products distribution, creates the opportunity to transform the dynamics of the downstream sector from one of ‘net importer’ to one of ‘net exporter’, spurring the growth of the Nigerian economy.

“Effective reforms and regulations are key drivers for the growth within the refining sector. Non-functional refineries cost Nigeria over $13bn in 2019. If the NNPC refineries were operating at optimal capacity, Nigeria would have imported only 40 per cent of what it consumed in 2019.”

Full deregulation of the downstream sector remains the most glaring boost to potential investors in this space, according to Oyebanji.

He said, “As crude oil prices will fluctuate depending on the prevailing exchange rates, it will be astute to trade in naira to avoid inevitable price swings.

“There needs to be a balance between ensuring the sustainable growth of the crude oil value chain (upstream through downstream) and providing value for the Nigerian consumer and the Nigerian economy.”

He said the philosophy should be for the government to put the legislative and commercial framework in place and let the market develop by itself.

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