Juliana Taiwo-Obalonye, Abuja
The National Economic Council (NEC) ad hoc committee has indicted Distribution Companies (DisCos) accusing them of shorting changed Nigerians by N164 billion because of under-investment.
This is as a result of their breaching their Performance Agreement Target between 2015 and 2018.
The companies, however, raked in N147 billion from investments on their networks by the Niger Delta Power Holding Company and the Rural Electrification Agency.
The NEC had set up the committee chaired by the Governor of Kaduna State, Nasir el-Rufai, to investigate the ownership structure of the DisCos.
The committee submitted its report to NEC presided over by Vice President Yemi Osinbajo in Abuja on Thursday.
The Governor of Nasarawa State, Abdullahi Sule, while giving the highlights of the report at the press briefing said the privatised power sector generally “underperformed”.
For instance, it noted that total indebtedness stood at N230 billion including “N48 billion of MDAs’ indebtedness to DisCos.”
It added that “DisCos indebtedness is driven by collection shortfall and low remittance.”
Specifically, on the breach of agreement, the report noted that “between 2015-2018, DisCos under-invested relative to their Performance Agreement Target by N164 billion (67%) and benefited from investments by NDPHC/REA in their networks to the tune N147 billion.
“Board composition across DisCos are disproportionately skewed toward private investors, while states and LGAs have no representation.
“While on reform revitalisation, the presentation stated that the Electricity Power Sector Reform Act established a good framework for driving the reform, through a multi-stage competitive approach, the establishment of an independent regulator, and mechanism to protect the poor.
“The sector has underperformed due to critical challenges, which include non-implementation of cos- relative tariffs, misalignment between the investors and Bureau of Public Enterprises on required investment in DisCos, under-investment in infrastructure and poor implementation of rules/ contracts.”
The committee recommended measures to strengthen the sector.
They include, “recapitalization of Discos, firm implementation of industry rules/ contracts and the insistence on sound governance principles that improve performance.”
The committee called for a “return to orderly evolution under market rules that make the contract effective between Gencos/IPPS, TCN, Discos and gas suppliers, backed by payment and performance guarantees.
“Recapitalised DisCos by shareholders (States/FG, core investors), encourage Gencos to bring in capital and management expertise.
“Implement and expand existing infrastructure finance support programmes to augment distribution, transmission infrastructure and rural/ off-grid programmes (TCN- $1.6 billion, Siemens-TBD; World Bank DISREP-$1 billion; REA/ NEP-$550 million).
The committee also called for the completion of the forensic audit of the contracts and other projects of the DisCos.
The NEC also gave an update in the balances in the major Federal Government Accounts. For the Excess Crude Account, it said the balance was $17million, while the Stabilisation Account had N35.8 billion as of March 17.
The Natural Resources Development Account had N109.3 billion.