A Review of the Nigerian Energy Industry

Electricity distribution firms owe govt agencies N14.16bn

15 October 2014, Abuja – Between November 1, 2013 and July 31, 2014, the privatised electricity distribution companies did not remit N14.16bn to different government agencies as stipulated in by interim market rule.

A document obtained by our correspondent from the Nigerian Electricity Regulatory Commission on Tuesday showed that the 10 privatised Discos were indebted to the Nigerian Electricity Liability Management Company, the operator of the Nigerian electricity market, and the Federal Inland Revenue Service to the tune of N14.16bn.

Dr. Sam Amadi
Dr. Sam Amadi, Chairman, NERC

As a result, NERC, in separate letters to the respective Discos on October 8, 2014, directed them to pay up the debts to the agencies and provide evidences of remittances made on or before the close of business on Friday, October 17, 2014.

It said failure to comply with the resolution would attract a fine of N10,000 for every hour until the eventual payment of the debts.

An analysis of the debts showed that Abuja Electricity Distribution Company owed the highest amount at N5.56bn.

As a result, NERC directed the Abuja Disco to remit N4.44bn to NELMCO; N753.24m to the Market Operator/NELMCO; and N168.98m to the FIRS.

The Eko Disco was asked to remit a total of N2.1bn. The firm was directed to transfer N612.59m to NELMCO; N390m to the Market Operator/NELMCO; and N1.1bn to the FIRS.

The Port Harcourt Disco was directed to remit N1.33bn. While N549.1m will go to NELMCO; N265.67m and N519.15m are to be transferred to the Market Operator /NELMCO and the FIRS, respectively.

The Yola Disco was mandated to remit N239.36m. Of this sum, N120m should be transferred to NELMCO; N57.1m to the Market Operator/NELMCO; and N61.96m to the FIRS.

The Benin Disco was mandated to transfer N665.33m to NELMCO and N133.51m to the FIRS, making a total of N798.84m.

The sum of N1.1bn should be remitted by the Enugu Disco. The firm was asked to transfer N698.11m to NELMCO; N168.58m to the Market Operator; and N192.67m to the FIRS.

The Kano Disco owed N954.94m, while the total indebtedness of the Jos, Ibadan and Ikeja Discos were put at N583.55m, N340.63m and N1.35bn, respectively.

The report noted that although the Kaduna Disco was exempted from making remittance to NELMCO, the firm, which has yet to be privatised, must remit its outstanding Value Added Tax deductions of N357.61m to the FIRS.

However, one striking issue raised in the report on the Kaduna Disco was the N17.8m it spent on hosting, logistics and entertainment of members of the Senate Committee on Power during an oversight visit to the firm.

“Given the level of revenue collection performance, we believe this expenditure was not appropriately incurred,” NERC said.

The report stated that the reference open book review of accounting/financial records of the Discos was conducted for the purpose of ascertaining compliance with the rules for the interim period, as amended April in 2014, and appropriateness of the expenditures embarked upon during the period under review.


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