You’re spending taxpayers’ money on misguided projects —DisCos tell Fashola

By Energy Worth

The confrontation between the power distribution companies and the Minister of Power, Works and Housing, Babatunde Fashola, continued on Sunday, with the Discos firing back at the minister, accusing him of spending taxpayers’ money on misguided projects.

Responding to Fashola’s recent statements against its members, the Association of Nigerian Electricity Distributors (ANED), the umbrella body of the power firms, said Nigerians were not getting value for taxpayers’ funds being channelled to misguided projects by the Rural Electrification Agency (REA), Transmission Company of Nigeria (TCN) and “friends” under the watch of the minister.

Fashola had, on Friday, lambasted ANED and condemned its reactions to his directives to the Nigerian Electricity Regulatory Commission, Bureau of Public Enterprises and Nigeria Bulk Electricity Trading Plc (NBET).

The minister, who called the association’s spokesperson an interloper, stressed that his directives were aimed at legal entities and not to an unlicensed organisation, ANED, and that the Discos were sabotaging Nigeria’s economy through their actions.

In a 28-page document released in Abuja on Tuesday by ANED, the power distributors had argued that most of the statements about the country’s power sector that were made recently by Fashola were false.

It stated that comments made by the minister on metering, power generation and transmission capacities and stranded electricity, among others, were significantly distorted.

This got the minister irritated, as he slammed the power firms as economic saboteurs on Friday.

Reacting to Fashola’s latest comments, the Discos, in another document made available to our correspondent in Abuja on Sunday, stated that it was astonishing and confusing to note that under the minster’s watch, an agency like REA was currently implementing a three-megawatt power project valued at N5.2bn or $5.6m per megawatt in Sokoto; and another two-megawatt plant in Anambra valued at N4.04bn or $2.02m per megawatt from taxpayers’ funds.

ANED said, “Why is this remarkable? It is remarkable because the government has robustly challenged, as exorbitant, the proposed price of $1.5m/MW put forward by power developers from the private sector and sought a reduction of same.

“Are Nigerians truly best served by the various ‘projects’ being promoted by REA, TCN and friends? Are taxpayers truly getting value for money with these projects? Should the unserved rural dwellers, who should be legitimate beneficiaries of REA’s funding and services, continue to live in darkness due to the ministry’s and REA’s misguided priorities?”

The Discos further argued that REA was going outside its mandate, as it had left rural electrification and was currently spending taxpayers’ funds on the urban areas.

They added, “Should the TCN, an entity without a distribution licence, continue to engage in opaque ‘Eligible Customer’ transactions, rather than investing its limited funding in expanding and stabilising the grid, for increased energy to our customers, given its status as the weakest link in the Nigerian electricity supply industry value chain?

“We believe that Nigerian taxpayers should legitimately be asking, ‘With 65 per cent of rural dwellers not connected to electricity, are the interests of these unserved dwellers best served by REA expending budgeted, borrowed and donor funding in urban areas that are explicitly outside of its statutory mandate?”

ANED also stated that power distributors were losing an average of N48 per kilowatt hour of electricity as a result of the non-review of tariff since February 2016, a period of about 30 months.

It added that the suspension of the tariff review process, which ought to be done every six months by NERC under the Federal Minister of Power, Works and Housing, had added to performance issues in a capital intensive power sector.

ANED said, “Through the regulatory and policy actions that have been principally driven by the minister, the Discos have been forced to sell their product, which should retail for an average retail tariff that is more than N80/kWh, at an average retail price of N32/kWh.

“While we acknowledge and are sympathetic to the government’s challenge of maintaining the balance between the myriad of its obligations and its fiscal constraint, continued failure to address this pricing gap means that we will only arrive at, and continue to exist in our current situation of N1.3tn of market shortfall and growing, and absence of the pricing signal that will grow electricity supply along the value chain.”