The Federal Government, on Monday, declared that power Distribution Companies (DisCos) inefficient in the Nigeria Electricity Supply Industry (NESI) are going to lose 50 per cent of their operating expenditures.
The declaration was made through the Nigerian Electricity Regulatory Commission (NERC) at the 1st NESI Stakeholders Meeting of 2024 in Lagos.
According to the government, individual performances of the DisCos shall be examined on a case by case basis going forward.
Officially, Nigeria has 11 power Distribution Companies that supply electricity to over 12 million registered power users across the country.
They were privatised in November 2013, alongside the power Generation Companies (GenCos) that produce the electricity supplied to the national grid.
The Transmission Company of Nigeria transmits the power produced by the GenCos to the Discos for onward distribution to users nationwide.
But the sector has been plagued by series of concerns, top among which is the issue of poor liquidity, and complains around the inability of DisCos to make adequate financial remittances to the industry to guarantee power production.
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However, via X on Monday, the power sector regulator stated that the Vice Chairman, NERC, Musiliu Useni, urged DisCos to improve their performance or suffer consequence.
Useni was quoted as saying, “NERC will look at performance on a case by case basis. Sanctions and actions will not be the same. Ensure that you (DisCos) improve your efficiency.
“If your efficiency is at the level expected, you will get your full OPEX (Operating Expenditure). If you don’t perform, you will only get 50 per cent of your admin OPEX.”
NERC, as the regulator of the power sector, has the power to approve the operating expenditures of DisCos and other key operators in the industry, and it has been doing this over the years.
Speaking on the operationalisation of Ministries Departments and Agencies centralised billing platform, Useni told his audience that this was being handled by the finance ministry.
“A payment system was put in place for critical MDAs, with an agreement for the central settlement of their electricity consumption by the Ministry of Finance, which would have access to their meter readings,” he stated.
He further noted that the sector must be run sustainably in terms of payment obligations by various operators.
“We need to ensure that sustainable payment going forward is in place. Market rules are clear, but they don’t envisage there would be tariff shortfall or subsidy,” Useni stated.
