NSE Urges FG to Intervene, Save Discos from Failing

The Nigerian Society of Engineers (NSE) on Friday urged the federal government to quickly step in and save the 11 electricity distribution companies (Discos) in Nigeria’s power sector from collapsing on account of the huge financial burden they currently bear.

This is as the Ikeja Electric Plc has emerged as the first company in the power sector to be conferred with the ISO 9001 and OHSAS 18001 International Certification, as a mark of its commitment to safety, and quality management of materials and resources.

Speaking on the back of the recent notice of force majeure issued to the Bureau of Public Enterprises (BPE) by some Discos, the President of NSE, Mr. Otis Anyaeji, explained in a press briefing on the just concluded annual conference and general meeting of the society in Abuja that the Discos were hugely distressed and needed quick help from the government to stay up.

Up to seven Discos had recently notified the BPE of their intention to declare force majeure on their operations on claims the government had continued to change the laws that guide operation in sector to their detriment.

One of the reasons they adduced for their intention to hand back the distribution assets to the government was the recent declaration of the eligible customers’ regulation which allowed maximum demand electricity consumers to contract services directly from power generation companies (Gencos) and with minimal interference from the Discos.

The Discos argued that the declaration of the eligible customers’ regulation was too early and the affected class of customers were the premium class that accounted for up to 60 per cent of their revenue, thus indicating that their already poor financial state could get poorer.

Anyaeji, however noted that when the investors in Discos were bidding for them, they were not allowed to carry out appropriate due diligence on the conditions of the distribution assets and so did not know the extent of their degeneration.

He explained that on the back of this and the poor attitude to payment for electricity distributed to customers in the country, the government could step in to help the market through its difficult phase.

“It goes to the question of us as a country refusing to honour contracts and obligations. The Discos started with a kind of handicap because when the negotiations were going on with the BPE, the Discos could not assess the assets because they were not allowed to by vested interests, and so they entered the contract without knowing the state of the infrastructure,” said Anyaeji.

He added: “What that means was that a bunch of the distribution infrastructure would need a lot of upgrading and rehabilitation to really get them to become functional because many of them were obsolete, and that was the situation they were.

“These facilities would continue to be low on operation unless some capitals were injected in them, and the money they get is low and perhaps they are not able to pay for capital projects. All these combine to really impose serious impediments for the Discos.

“If we could manage to settle obligations, that could give some respite to the Discos and they could be able to do their jobs. Adequate funding should be made available for those who are managing the Discos, the government should step in to help them.”

Meanwhile, the duo of Abuja and Kaduna Discos, have indicated they were not part of the Discos that notified the BPE of their intention to declare force majeure on their operations, to which both the BPE and Nigerian Electricity Regulatory Commission (NERC) have nevertheless rejected.