Operators kick against Management of N72bn Investment in Discos
In a related development, the power operators have also kicked against the plan by the federal government to allow the Transmission Company of Nigeria (TCN) to manage the government’s N72 billion investments in the Discos.
The federal government had hinted it would invest about N72 billion in the Discos to be managed by the TCN to upgrade the Discos’ networks and enable them distribute about 2000 megawatts (MW) of electricity it claimed was lying idle.
But the owners of the Discos argued yesterday that they would not back such decision, adding that they still maintain up to 60 per cent shareholding in the networks.
The Discos further added that as part of Nigeria’s company laws, their boards should be allowed to deliberate and decide on the conditions for such investments if they would ever accept it.
The Discos under the aegis of the Association of Nigerian Electricity Distributors (ANED) said they do not have confidence in the TCN.
“It will be difficult for the Discos to acquiesce to TCN/ MoPWH (Ministry of Power, Works and Housing) adding a further N72 billion of debt to the N1.3 trillion of debt already on their financial books, given the Discos’ inability to access debt financing required to address massive capital expenditure requirements that far exceed the N72 billion initiative that is required to inject the efficiency that electricity customers demand; the Discos’ regulatory constraints; and the uncertainty of projects built by an entity that is licensed only to transmit energy and not distribute energy.
“It should also not be forgotten that the Discos are already carrying, out of the total sum of N210.61 billion, 72.25 per cent or N152.16 billion of legacy gas and energy debt (incurred by PHCN) associated with the CBN’s Nigerian Electricity Market Stabilisation Facility (NEMSF), a debt unconnected with the Discos, a contravention of the debt-free requirement, that was a fundamental contractual requirement of the sale of the distribution assets,” ANED explained.
They said the basis of the planned N72 billion funding was to evacuate 2000MW of electricity which they claimed were not stranded on account of distribution limitations but mostly by gas, frequency, and line constraints.