IT is ironical that while Nigeria has not been able to meet the power needs of its citizens, it has been supplying electricity to some neighbouring West African countries such as Benin, Niger and Togo. While there is nothing wrong with Nigeria selling electricity to these countries, it is not right that these countries owed Nigeria N29.97billion for the electricity supplied to them from January to September 2019. According to the Nigerian Electricity Regulatory Commission (NERC), these countries, classified as “international customers,” made no payment for the total outstanding debts in the third quarter of last year.
Their inability to pay the debts has become a source of concern, especially now that the Federal Government is in financial crisis and the power sector is also facing daunting challenges. Despite the Federal Government’s continued engagement with the debtor countries, they are yet to settle their debts. For instance, the Nigerien power firm, Societe Nigerienned’electricite, has failed to pay a total invoice of N3.01billion worth of electricity received in the first quarter (Q1) of 2019, N3.69billion in the second quarter (Q2), and N4.1bilion in the third quarter (Q3).
Also, a power firm jointly owned by Togo and Benin, known as Communate Electrique du Benin reportedly did not pay N9.74billion for the power supplied to it in Q1, N7.16billion in Q2, and N2.27billion in Q3. A total invoice of N179.66billion was reportedly issued to the power distribution companies for energy received from the Nigerian Bulk Electricity Trading (NBET) Plc and for service charged by the Market Operator (MO) in the last quarter of last year to the three West African countries, but only N58.81billion was paid. This represents less than 35 per cent of the debts.
We are aware that under the agreement signed by these countries with Nigeria, government-owned NBET buys electricity in bulk from Discos through power purchase agreements and sells them through vesting contracts, which then supply it to the consumers.
It appears that Benin, Niger and Togo have shown complete lack of good faith in the power supply deal entered into with Nigeria. The Federal Government negotiated the power deal with these countries in July 2019. A document signed by the Managing Director of NBET, Dr. Marilyn Amobi, said it had long finalised negotiations with the power firms representing the interest of the three countries. The negotiation was centred on “appropriate commercial terms” under the cost of service and price cap-based incentive regulation mechanism it used to set the revenue requirement of grid electricity users.
The agency insisted that the new terms clearly reflected the existing structural and governance regime obtainable in Nigeria’s electricity market. In 2018, the Federal Government issued a disconnection notice to the three West African countries and asked NBET to recover the debts that had accumulated before that of 2019. Government also threatened that the affected countries should be disconnected if they failed to pay the debts. But government did not follow through its threat after the Minister of Power from Niger Republic visited Nigeria and pleaded for more time.
Since NERC and NBET have evidence that the three countries have defaulted in the payment agreement, we urge the government to review the terms agreement to ensure prompt payment of the debts. Termination of the agreement should be a last resort. Nigeria has played the “big brother” role to many African countrie, including those in West Africa, but that should not be at the detriment of Nigeria’s collective interest.
It smacks of bad faith if the countries fail to pay Nigeria for the electricity supplied. Figures from the NERC have shown that Nigeria met the requirement in the electricity supply agreement with these countries. While we recommend that Nigeria should use diplomacy to resolve the issue, a debtor must liquidate his debt if he should continue to enjoy the services of his creditor. The logical thing to do at this point is for the relevant agencies to commence plans to recover the debts.