DISCOs reject N72bn networks projects by TCN


Crisis rocking the power sector of the economy, Sunday, took a different dimension as Electricity Distribution Companies, DISCOs, rejected the N72 billion distribution networks investment being executed by the Transmission Company of Nigeria, TCN.
The DISCOs, instead, argued that any investment in distribution networks without recourse to them managing the networks was wrong investment.

Acting under the aegis of Association of Nigerian Electricity Distributors, ANED, DISCOs in a statement in Abuja, expressed concerns that customers might bear the cost of the unsolicited and wrongly directed investment, stressing that government-run TCN had no capacity to invest in a private-led power network.

ANED spokesperson, Sunday Oduntan, said: “To ensure that electricity customers do not unduly bear the cost of electricity inefficiencies, procurement is required to be implemented efficiently and on a ‘best-value’ basis.’’

Managing Director of TCN, Mr Usman Gur Mohammed, told newsmen recently that TCN was no longer the weakest link in the power sector value chain and that the Federal Government had directed it to invest N72 billion in the DISCOs’ network to improve power distribution.

But the DISCOs said it was the obligation and business of the investor to access debt financing for any such investments, freeing government funds for other urgent social investments.

It said: “Given the heavily regulated nature of the distribution sub-sector and that this planned expenditure falls outside of the legal/regulatory requirement that capital investment must be recovered through the tariff, failure to adhere to this requirement will cause a problem of lack of recovery of the N72 billion.”

“This initiative creates the potential for a return to the old days of the government trying to implement projects that it is not suited for.”

They noted that rather than government intervening in reducing the N1.3 trillion market shortfalls in the power sector, the N72 billion TCN investment directed at evacuating a non-existing 2,000 megawatts (MW) would further raise the debt profile.

According to DISCOs, “we believe that the N72 billion should be directed towards filling the tariff gap, providing the commercial framework that will ensure that Nigerian electricity customers receive the immediate benefits of increased and stable power.”


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