Discos to repay N34bn CBN loan this year

Electricity distribution companies are expected to repay this year N34.05bn of the loan disbursed under the Central Bank of Nigeria-Nigeria Electricity Market Stabilisation Facility programme.

The Nigerian Electricity Regulatory Commission disclosed this in its 2016-2018 Minor Review of Multi-Year Tariff Order 2015 and Minimum Remittance Order for Year 2019 for the Discos.

In November 2014, the CBN, the Ministry of Petroleum Resources, Ministry of Power and NERC signed a memorandum of understanding on the CBN-NEMSF, with N213bn earmarked for disbursement through deposit money banks.

The facility was set up to address shortfalls in power sector revenues, and billions of naira has been disbursed to the power firms including generation companies.

Enugu Electricity Distribution Company is expected to repay N5.57bn this year; Abuja Disco, N4.95bn; Benin Disco, N4.89bn; Ibadan Disco, N4.58bn; and Port Harcourt Disco, N3.38bn.

Kaduna Disco is expected to repay N3.34bn; Jos Disco, N2.68bn; Kano Disco, N1.76bn; Ikeja Disco, N1.75bn; and Eko Disco, N1.03bn.

Yola Disco, which was returned to the Federal Government by the core investor in 2015, has the lowest payment obligation of N61m this year to the CBN, according to NERC.

On July 2015, the Federal Government took over Yola Electricity Distribution Company following the exit of the core investor after it declared a force majeure, citing insecurity in the North-East region of the country.

According to NERC, the minimum market remittance threshold for Discos is determined after deducting the revenue deficit arising from tariff shortfall from the aggregate market invoices from the Nigeria Bulk Electricity Trading Plc and the Market Operator.

The government-owned NBET buys electricity in bulk from Gencos through Power Purchase Agreement and sells through vesting contracts to the distribution companies, which then supply it to the consumers. The MO is an arm of the Transmission Company of Nigeria.

The regulator said it had confirmed N1.15tn as the tariff shortfall suffered by the 11 Discos from 2015 to 2018.

It said the Discos would be availed the opportunity to earn their revenue requirements only upon fully meeting the payment obligations including the repayment of the CBN-NEMS facility and 100 per cent settlement of the MO’s invoice based on the tariffs applied by the MO in determining respective invoices prior to the order.

“Effectively, this order places a freeze on the tariffs of the TCN and other administrative charges covering NBET and the commission throughout 2019 at the rates applied in generating the MO invoices for the period of January – May 2019,” NERC said.