Fashola talks tough, threatens to sanction electricity distribution companies

The Minister of Power, Works and Housing , Babtunde Fashola, has threatened to sanction power distribution companies, Discos, for their continued breach of agreed terms and epileptic service.

The minister, who spoke during the 15th monthly meeting of power sector stakeholders in Jos , Plateau State on Monday, declared that the power firms had failed Nigerians in many aspects.

Mr. Fashola, who condemned a statement released by the Discos recently, said the alarms raised by the power firms were “wholly misleading and substantially untrue, because they conceal facts from the public.”

Earlier, the distribution companies had, among other issues raised, alleged that the infrastructure in the power sector were obsolete and affect their operations.

But in his reaction, the minister said the allegations were unnecessary because the power firms were aware of the state of the facilities when they purchased the asset.

Commenting on how the Discos frustrate efforts of the government, Mr. Fashola said the firms had formed themselves into an association of power distribution companies and had consistently issued statements on issues they either did not present for discussion at meetings, or which contradicted the communiqué jointly released after each meeting.

He, however, said that the power ministry reserved the right to recognise or deal with the Discos as a body, but would only deal with them as individual power firms if the need arises.

The minister, who expressed worry over the poor attendance at the forum, said the distribution companies are bent on frustrating the stakeholders’ meetings.

Mr. Fashola also alleged that the Discos had failed in providing meters and electricity feeders to consumers, adding that they had been remitting very poor revenue to the market and making false allegations against the government.

On the allegation made by the firms that attempts to escrow their revenue accounts would amount to nationalisation or an intrusion into their business, Mr. Fashola said the firms failed to state that the condition was agreed upon by the firms and the Central Bank of Nigeria, CBN, noting that the agreement between the Discos and the CBN was a condition for the bank to offer the firms stabilisation funds by way of loans to fund the business they invested in because commercial banks were reluctant to do so.

“What you (Discos) also failed to state was that the loan was at 10 per cent interest , which is well below the commercial rate,” the minister said.

“What you also failed to state is that you also agreed under that arrangement to establish letters of credit to guarantee future payments to the NBET and Transmission Company of Nigeria ’s Market Operator, that the agreed commercial terms of the letters of credit authorises the NBET and the Market Operator to draw on the letters of credit for any default in payment to them, and that such defaults have occurred and continue to occur.

“Any right-thinking person will accept the principle that any person lending you money must have the right to know what you are doing with the money , especially when under – collection and underpayment have been a major feature of many Discos’ performance.

“As far as the regulation on your procurement is concerned, what the public needs to know, which your statement was silent on , is that you are entitled to fully recover your costs and investments by law , and this is the function of how tariffs are calculated.”

On corporate governance, the minister stated that the power firms had failed to provide audited financial statements as required by their licences.

“If a company cannot produce all the records of its transactions and accounts , does that not allude to gaps in its governance ? Does the fact that consumers go beyond their service provider who collects the money monthly to complain to government, who does not collect money for their power, not call for a look in the mirror about your corporate governance ?

“Good corporate governance will ignite the conscience of an electricity business to first provide meters to its customers before seeking tariff increase, so that a metered consumer will at least have the ability to fairly measure from his meter how he is being billed,” he said.

Similarly, according to the minister, many of the power firms failed to invest in feeders and distribution equipment to get power to consumers , adding that this resulted in reduction in an economy that did not have enough electricity.

The minister also condemned alleged attempts to frustrate consumers who choose to facilitate power generation for themselves, adding that the epileptic service of the firms led to the development in the first place.

He said, “Your statement does not address the ill- logic of standing in the way of a consumer seeking to get by himself what the service provider has failed or is unable to give him.

“As for the alarm and panic which your statement seeks to raise about increased tariff, eligible customer declaration is not compulsory and applies only to those who elect to benefit from it, and they are in a position to decide whether a tariff of over N60 per Kilowatt hour of generation by diesel which they currently use is preferable to investing in a distribution asset that gives them power at a lower tariff.

“What is important is that the law is followed, consultations are held with prescribed and decisions are taken.

“No Disco has exclusive rights over any area and its ability to retain an area must be consistent with the ability to provide service to the area.”