Nigeria: DISCOs get deadline to pay debts for procured power

Electricity worker.

Electricity worker.

09 July 2015, Lagos – Defaulting electricity distribution companies in the country have been given up till tomorrow to Friday to pay up their outstanding debts or risk stiff sanctions.

This notice was issued yesterday by the Nigerian Bulk Electricity Trading Limited (NBET), explaining that the debts covered outstanding payments for capacity and energy invoiced for February, March and April of this year.

A press release from NBET (the Bulk Trader) and signed by Aisha Waziri of the Corporate Communications department warned that it would use every option within the law to seek settlement of the outstanding invoices.

The Bulk Trader holds a trading licence to purchase power from generation companies and resell to DisCos. In preparation for Transitional Electricity Market (TEM), the company entered into Power Purchase Agreements with Generation Companies for power purchase and into Vesting Contracts with each of the eleven DisCo for resell. Eight of the Discos Vesting Contracts (VC) are backed by a payment security in form of a bank guarantee issued in favour of NBET.

NBET said demand notices had been issued to these Discos indicating that NBET may call on this security if full payment is not received.

“The TEM Supplementary Order stipulates that DisCos who have not provided bank guarantees and default in payments shall have their revenues escrowed. NBET aims to enthrone discipline in the market by escrowing the payments of the defaulting DisCos in compliance with the Supplementary Order,” the statement noted.

The statement noted: “The Management of the Nigerian Bulk Electricity Trading Plc (NBET) today issued payment demand notices to the Distribution Companies for outstanding amounts for Capacity and Energy invoiced for the three months: February, March, and April 2015.

“NBET is concerned that after the commencement of the Transitional Electricity Market (TEM), DisCos have continued to fail in meeting their payment obligations. The average payment by DisCos for the corresponding months were 80 per cent in February, 70 per cent in March and 54 per cent in April. In issuing the Demand Notice, NBET Management is taking the first step in seeking compliance by the DisCos noting that failure to arrest the trend will exacerbate the liquidity crunch in the sector.

“In the Demand Notice, NBET urged the Discos to comply with the TEM Order and Supplementary Order on the commencement of the Transitional Electricity Market (TEM) issued March 2015 by the Nigerian Electricity Regulatory Commission (NERC) and make full payment on or before Friday, July 10, 2015.”

A source said the Discos owe over N10 billion in their deficit energy balances.
*Emeka Anuforo – The Guardian

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