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Discos raise alarm over plans to escrow accounts

By Adewale Sanyaolu

Investors in the power distribution companies (Discos) have raised the alarm over moves by the Federal Government to escrow their revenue accounts.

Executive Director, Association of Nigeria Electricity Distributors (ANED), Mr. Sunday Oduntan, warned that any attempt to go ahead with the plan is tantamount to nationalisation or expropriation of the Discos.

“To date, the government has not met the privatisation transaction foundational requirements of providing N100 billion in subsidy to the sector.

“Any attempt at escrowing our accounts runs counter to the objectives of the National Electricity Power Policy, 2001 (NEPP) and the Electric Power Sector Reform Act, 2005, of a private sector-owned and managed electricity sector,” he said. 

Oduntan equally maintained that the move would also send very wrong signals to domestic and international investors that Nigeria is not fully open for private sector investment and that, “we are still in favour of old habits of nationalisation, preventing the injection of the needed capital that is critical to the rehabilitation and improvement of electricity infrastructure.

“You cannot have a supposedly private sector-owned and managed business in which the government now seizes control of its revenues. It is a contradiction in terms and practice. The same principle applies to any consideration of regulations or government action that intrudes into corporate responsibilities of procurement, financial management or personnel management.”

Making reference to procurement processes, the Discos insisted that they are not aware that the Nigerian Communications Commission (NCC) issues regulations to guide the internal procurements of the telecommunication companies. CBN and the Department of Petroleum Resources (DPR). “Singularly and in aggregate, such proposed action would endanger the ability of the government to hold the Discos responsible for performance and this amounts to government takeover of the Discos, thereby, precluding further private sector investment in the sector.”

On plans to get discos declare their eligible customers, ANED said it understands that the idea of eligible customer declaration is under serious consideration, stressing that the association’s understanding is that eligible customers may only be declared by the Minister when a competitive market exists in the Nigerian Electricity Supply Industry (NESI).

“Such a market requires the presence and utilisation of industry contracts; competition and efficiency that will drive down electricity prices for the customers; and infrastructure that will allow for uninterrupted delivery of power to our customers.

“This competitive market, currently, does not exist.  Additionally, while Section 27 of EPSRA provides the Minister with the authority to determine ‘end-use customers’ who shall ‘constitute eligible customers,’ it also requires that any such determination must be consistent with Section 28 of the same Act, which requires that the Discos must be compensated for any reduction in their ability to ‘earn permitted rates of return on their assets’ or any inadequacy in their revenues as a result of such determination.”

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