16 September 2016, Sweetcrude, Abuja – The Federal government has stated that it is in the process of settling the about N80 billion debts owed to the electricity distribution companies (Discos) by its ministries, departments, and agencies (MDAs).
The Minister of Power, Works, and Housing, Mr. Babatunde Fashola, who said this while he was hosting the new managing director of Abuja Electricity Distribution Company (AEDC), Ernest Mupwaya, in his office in Abuja, added that the government was in the process of verifying what is owed and to whom.
Fashola said, “We need to verify some of the debts and stratify who owes what and who is owed what.”
The minister requested AEDC to provide the government with helpful information to speed up the reconciliation of its debt.
Fashola further announced that the Debt Management Office (DMO) has come up with a financial scheme that will be used to assist the MDAs in paying electricity bills.
The minister added that the financial plan is targeted to be in place before the end of this year.
He said this follows after the DMO had responded to a letter he wrote to the office requesting for alternative means of settling the debt, of which it also offered various options that could be implemented in paying off the debt.
The Association of Nigerian Electricity Distributors’ (ANED) Executive Director, Research, and Advocacy, Mr. Sunday Oduntan, stated recently that the huge debt was impacting on the Discos’ operations, with their liquidity levels becoming tight.
Meanwhile, Mupwaya revealed to the energy minister that Abuja Disco has been unable to meet the request for a Letter of Credit (LC) to the Nigerian Bulk Electricity Trading Plc (NBET) and equally participate in the Central Bank of Nigeria (CBN) market support fund due to the huge debt owed it by the MDAs.
AEDC’s boss also stated that the Disco was already in negotiation with one of its debtors, the Federal Capital Development Authority, which is said to have agreed to pay N500 million ($1.583 million) as part of the settlement process.
Mupwaya also said the Disco would want Fashola to approve that it convert parts of the debt owed to it by the MDAs to a collateral for the LC it is required to post to the NBET.
He said: “We seek the minister’s ‘No Objection’ to use a portion of the MDAs debts as collateral for the LC,” adding that the LC will boost Abuja Disco’s credit worthiness and help it to be eligible for the CBN fund.