A Review of the Nigerian Energy Industry

Power firms record N69bn revenue shortfall

Gas fired power plant16 July 2014, Abuja – Between November 2013, when the power generation and distribution firms were privatised and June 2014, the companies have had a shortfall of N69bn from the proposed N144bn revenue they were expected to generate.

It was gathered that as a result of the myriad of problems confronting the power sector, the firms have only been able to realise N75bn as revenue during the period.

Our correspondent gathered on Monday that the revenue shortfall was one of the critical issues discussed at the Nigerian Electricity Regulatory Commission’s monthly meeting with stakeholders in the industry, which was held in Abuja on Thursday.

There are, however, insinuations that some electricity distribution companies, which directly interface with the consumers, are not meeting their obligations to the generation companies, gas suppliers and other creditors from the money they make from customers.

An industry source, who took part in the stakeholders’ meeting, told our correspondent in confidence, “Because of the huge shortfall in the projected revenue for the sector, it was suspected that some Discos were not giving accurate account of the money they collected from customers.

“But they were meant to know that the case was like that of a parasite and its host. If the host eventually dies because of the activities of the parasite, the parasite will eventually die too.

“If the generation and transmission companies are continually starved of funds because the Discos are not remitting the right amount, the Gencos and the transmission company may die. This is not going to end there because the Discos will eventually die.”

The source explained that the reason the Discos were still in operation was because the Gencos were supplying them with electricity.

“Once there is nothing to generate, there will be nothing to distribute. So, this is one thing the Discos must realise,” the source added.

Findings by our correspondent also showed that NERC was showing some level of understanding with the Discos because the industry was still in the interim period.

This has made the regulator to hold back any form of sanctions that ordinarily would have been imposed on the errant Discos.

In November last year, the Federal Government, through the Bureau of Public Enterprises, had said the power generation companies would be required to invest at least $35bn over the next 10 years to increase capacity.

The Director-General, BPE, Mr. Benjamin Dikki, in a document also affirmed the government’s aspiration to meet the Vision 2020 target by generating 20,000 megawatts of electricity through an annual investment of $3.5bn over the next 10 years.

When put together, this will amount to $35bn over the 10-year period.

“The ambition of the Federal Government is to meet the Vision 2020 target of 20,000MW, which requires an investment in power generating capacity alone of at least $3.5bn per annum for the next 10 years,” Dikki had said.

According to the BPE DG, the new power investors are contractually obligated to inject into the system the necessary investments they have committed themselves to.

“We have made the bidders contractually required to bring in these investments; therefore, the BPE and the Federal Government will be following up on this continuously,” he said.



– The Punch


– The Punch

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