Mohammed Shosanya
Power Up Nigeria,a consumer group in the nation’s power sector,has advocated the need for increased engagement between Market Operators and Distribution Companies to resolve issues surrounding the latter’s
non-compliance with the conditions of market rules and market participation
agreements.
The Transmission Company of Nigeria,hasd last week disconnected some of the defaulting companies to enforce compliance with the market rules
Adetayo Adegbemle, Executive Director of the group,said in a statement that the development was necessary to prevent undue hardship to the defaulters and their customers affected by the disconnection.
He added:”At the end of this imbroglio,it’s consumers and industries that will continue to suffer the fallout, and the further loss of confidence from would-be investors that might be interested in buying the ailing Discos”
He recalled that the Market Operators listed thirteen (13) Market Participants, including Abuja, Ibadan and Jos Electricity Distribution Companies, Ikeja Electric, Kaduna Electric, and APL Electricity Company Limited. Others are Port Harcourt, Benin, Kano and Enugu Electricity Distribution Companies,
Ajaokuta Steel Company Limited, NDPHC and Paras Energy and Natural Resources Development Limited as the defaulters.
According to him,the list of defaulters include Distribution Companies that could be considered healthy, but mostly populated with Discos that recently entered into receivership among which are Ibadan, Benin, Kaduna and Kano DISCOs.
“After the Tuesday March 21st, 2023 publication, the MO has gone ahead to partially disconnect both Kano
and Kaduna Discos, again, both companies that has recently gone into receivership barely 8months ago, for the same reasons they went into receivership in the first instance.
“We gathered that the response by these Discos to the March 21st publication by the MO were not really considered, with the MO demanding and insisting on Bank Guarantees from these defaulting Discos to cover their market shortfall despite being in a receivership status.
“Admittedly, market rules must be followed by all market participants, but we should not be oblivious to the realities on ground. Liquidity issues in the Nigerian Electricity Supply Industry is a problem that has been in existence for over nine (9) years since after the privatization, and it is a wonder why the MO and regulators expect things to
change overnight.
“Since the takeover by these DISCOs in July 2022 by the temporary boards, every metrics that the regulators and the market use to measure performance by the Discos has improved considerably. It must be noted that the performance of these companies has shown an upward trajectory in the last eight
months, particularly their remittance to the market.
“Speaking of Bank Guarantees, it is left to be seen what kind of Bank Guarantees the MO is expecting from temporary boards and present DISCO(s) core investors, the likes of Fidelity Bank and UBA that are already
concerned about their exposures, and are looking for private investors to acquire the majority stake in the electricity distribution companies.
“There are still questions about the level of engagement that the Market Operators have had with these defaulters and the wider stakeholders, particularly on their receivership status, the feasible expectations and considerations extended to them by the market.
“We should be careful, in our bid to enforce market rules, not to aggravate the liquidity challenges of the defaulting Market Participants,and throw away the little progress that might have been achieved in the last eight months”
