Electricity: Nigeria Declares DisCos Failed Ventures, Firms Risk Imminent Liquidation 

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By Our Reporter

Federal Government of Nigeria on Wednesday declared Distribution Companies (DisCos) failed ventures following their inability  to distribute power across the country.

This is even as it has declared it will no longer subsidise the DisCos  noting that despite doling out about N1.7 trillion to the companies in three years, they are only able to distribute 3,000mw out of about 10,000mw generated.

Minister of Power, Saleh Mamman, made this closure at the end of the Federal Executive Council (FEC) meeting presided over by President Muhammadu Buhari.

Mamman, who briefed alongside his colleagues from Ministries of Information and Culture, Water Resources, Industry Trade and Investment explained that while the DisCos were collecting the 3,000mw, they were only paying for 1,000mw.

The minister said the DisCos must show that they have capacity to distribute power to Nigerians or surrender for more competent companies  to be engaged.

Mamman said the government cannot continue to subside the companies without commensurate result.

The minister further disclosed that he presented the report before council to decide immediately.

Recalled the Governor of Kaduna State, Nasir el-Rufai, at the end of last month’s National Economic Council meeting disclosed that the federal government has spent N1.7 trillion on electricity in the last three years.

The governor who is the head of the ad-hoc committee on power had said: “What we have agreed on is that there are fundamental problems in the electronic supply industry, and that you cannot privatise an industry and then over three years since privatisation, you pump in N1.7 trillion of government into it. That is not privatisation.

“The federal government has supported the electricity sector with N1.7 trillion in the last three years and this is not sustainable. So, solutions must be found. Those solutions are not going to be nice. They may be painful, but the only way to solve the structural problems in the industry is to take some very difficult decisions.”

Giving details of what transpired at the Council meeting, Mamman said: “We presented achievements right from the day we took oath of office to date.

We want to tell Nigerians what we achieved in the value chains. Nigeria can generate up to 13,000 megawatts of electricity but we cannot transmit all. So today, we presented to the council the solution to the problem of our generation. It is mainly distribution. We can transmit, we can generate 13,000 megawatts, we transmit 7,000 megawatts but can only distribute 3,000. There is a lot of work to be done in transmission companies and the government is now willing to take up the matter immediately.”

Asked what exactly the council has revolved to do, the minister said: “What I want to say is that most of the problem we are facing in this country that we cannot get electricity supplied adequately and efficiently is because we have a problem in distribution. Generation, no more problem. We can generate up to 13,006 megawatts but the transmission, those who are taking the electricity supply can only take 7,000 megawatts, even at that they are not taking the whole 7,000 megawatts but only 4,500 megawatts and then send to distribution, the distribution in turn receives only 3,000 megawatts. Because of the technical and commercial reasons, they cannot contain the whole power that has been generated.

So, we have to correct the infrastructure. That is why I said that today, I submitted my observation to council and I believe the government is on it.

“One of the things I will tell you is that government has signed memorandum of understanding with the German government, Siemens. They are to align between distribution and transmission and also generation. So that at the end of the day if we generate 13,000 megawatts, transmission will take the whole 13,000 and will distribute same, that way Nigerians will be happy and everyone will have 24/7 electricity supply.”

On what will become of the DisCos, Mamman said: “The DisCos are the ones manning the distribution, that is why I have submitted my observations  to the government, it is left for the government  that will have to decide. We just have to sit and see whether they are capable, if they have the technical know how because most of the problems we are having today is the loss- technical loss and commercial loss. They will give you light and may not collect your money or they will collect the money and pocket it, or they may send light and you may not have good sub-station that may collect this power and distribute to customers. This has been our major problem and it is the responsibility of the DisCos to take care of that end.”

On what will now happen  to the several financial interventions the government has made, Mamman said: “That is what we are saying, government cannot continue subsiding because what they doing is that they collect 3,000 megawatts and pay for only 1,000 megawatts, that is 15 per cent of what they are collecting, so government is the one completing the payment. So we cannot continue like that. So if they are ready to continue, fine but if they are not ready to continue maybe they should give way to whoever that is ready to come and invest. So we are asking government to review and see if they are capable fine but if they are not capable they should give way.”

On how the government will address the debts between DisCos and GenCos, between GenCos and  Gas producers, he said: “Well, we have come up with a plan, that issue of willing buyer, willing seller. You know there is ardent capacity of generated electricity that we cannot pick at all. So we are now asking the GenCos…you can imagine we are only paying them 15 percent out of 100 so where do we take the remaining 85 percent? Even if Embet is collecting 100 percent, gas alone is taking 60 percent, only 15 percent is used for their overheads. So if they cannot week outside the agreement with the Embet you can see how they are struggling to get their money back. Embet buys electricity from DisCos, supplies to GenCos and collect money from DisCos and pay the GenCos, that is why we have the gaps and that is why we have to do something to correct these gaps. It is now government’s decision.”

Meanwhile, the FEC meeting, has approved additional N6.9billion for the completion of the Tada Shonga Irrigation Project.

The project is located in Shonga, Kwara State.

The Minister of Water Resources, Mr Suleiman Adamu explained that the additional approval brought the total project cost to N10.18 billion.

The minister explained that the project was first awarded in 2010 but was later abandoned due to lack of funding.

He said the decision to do augmentation and variation on the project and complete was in line with the Buhari regime’s stance to complete viable projects previously awarded.

The minster stated that the variation increased the size of the project from 1,500 hectares to 2,300 hectares of irrigation.

He added, “For that purpose, we sought for the augmentation and variation in the sum of N6.9 billion, raising the project from the original sum of N3.26  billion to N10.18 billion, with the completion period of 36 months.”

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