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Sunday, February 25, 2024

FG threatens 50% cut in expenditures for underperforming Discos

Federal Government signals tough stance at 1st NESI Stakeholders Meeting, urging improvement or facing consequences.

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At the inaugural Nigeria Electricity Supply Industry (NESI) Stakeholders Meeting of 2024 held in Lagos, the Federal Government, through the Nigerian Electricity Regulatory Commission (NERC), issued a stern warning to underperforming power distribution companies (Discos), declaring that they risk losing 50% of their operating expenditures.

Nigeria boasts 11 power distribution companies that cater to over 12 million registered power users nationwide, a pivotal aspect of the country’s energy infrastructure following their privatization in November 2013. However, persistent concerns, notably liquidity issues and Discos’ financial remittance shortcomings, have shadowed the sector’s operations.

During the meeting, Musiliu Useni, Vice Chairman of NERC, emphasized a case-by-case evaluation of Disco performances. He underscored that sanctions and actions would vary accordingly, urging Discos to elevate their efficiency to avoid repercussions. Useni emphasized, “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 sector’s regulatory authority, wields the power to sanction and approve the operating expenditures of Discos, a responsibility it has exercised over the years.

Useni also touched upon the centralised billing platform for Ministries, Departments, and Agencies (MDAs), highlighting efforts by the finance ministry to streamline payment systems for critical MDAs.

The meeting aimed to chart strategic directions for NESI, review compliance since the last gathering, and provide a platform for licensees to address pertinent issues. Chidi Ike, NERC’s Commissioner for Engineering, Performance, and Monitoring, outlined plans for a comprehensive workshop to scrutinize licensee responsibilities, including legal frameworks and health and safety standards.

Expressing concerns about construction under transmission lines, Ike warned Discos against supplying power to such structures, emphasizing compliance with TCN’s Right of Way.

Additionally, John Joseph, Assistant General Manager at NERC, highlighted safety concerns, attributing 38% of accidents in 2023 to unsafe conditions, underscoring the importance of adhering to safety guidelines.

The meeting signaled a pivotal moment in Nigeria’s energy landscape, with the government signaling a robust stance to enhance operational efficiencies and safety standards within the power distribution sector.

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