Disco Owed N1.15 trillion in Power Supply Tariff Shortfall –NERC

electricityA view of the power lines as evening settles. Photo by David McNew
  • Disco Owed N1.15 trillion in Power Supply Tariff Shortfall –NERC

The Nigerian Electricity Regulation Commission (NERC) has revealed that 11 power distribution companies across the country are owed a total of N1.15 trillion by electricity consumers in the space of four years; 2015 to 2018.

NERC revealed this in a document published on its website titled, ‘2016-2018 Minor Review of Multi-Year Tariff Order 2015 and Minimum Remittance Order for Year 2019 for the Discos’.

The commission also urged the Discos to disconnect electricity supply to any Ministry Department and Agency (MDA) of government that refuses to pay for power consumed, adding that it is mandatory for Discos to assign them meters of their choice.

It said “All discos reserve the right to disconnect any MDAs defaulting in the payment for electricity in line with the Regulation on Connection and Disconnection Procedures for Electricity Services”.

The commission, however, acknowledged that the rise in debt with the period under review was as a result of its failure to review and approve the right tariffs for the Discos; a decision it made based on orders by the Federal Government. It explained that the reviews, meant to be done periodically, are in two phrases; minor and major phrases. At both stages, economic determinants necessary for power generation and supply such as such price of gas and exchange rates, are reviewed and that a disregard of the reviews would affect the Discos as they would supply power on terms that were not workable.

According to the commission, Port Harcourt Disco suffered a loss of N104.31 billion in shortfall while Abuja Disco recorded N102.22 billion.

Also, Kano Disco recorded a shortfall of N97.82billion, Enugu recorded, N95.64billion and Jos, N88.36billion.

The largest shortfalls were recorded by Ibadan Disco with a shortfall of N161.88 billion, followed by Ikeja Electricity Distribution Company with N124.17 billion, Benin Disco at N155.35 billion and Kaduna Electricity Distribution Company at N144.54 billion.

The lowest shortfall was recorded by Yola Distribution Company with a shortfall of N51.63 billion. The Yola Disco was taken over by the Federal Government in July 2015 after the exit of key investors following insecurity challenges in the North-East Region.

According to NERC, in accordance with the Power Sector Recovery Plan (PSRP) approved by the Federal Government, all accrued liabilities in Discos’ financial records arising from tariff shortfalls would be transferred off the balance sheet and fully settled under the financing plan of the PSRP initiative.

“All Discos with excess of tariff shortfalls over market shortfalls shall be compensated accordingly for the differences. All interest payable by Discos on unpaid invoices issued by the NBET and the MO and attributable to tariff shortfalls shall be transferred off the balance sheet of the utilities, ” It said.


About the Author

Samed Olukoya
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 long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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