*The power sector’s Transmission Company of Nigeria has disclosed the market gap, resulting from the non-payment of 100 percent of the invoice issued to DisCos has become a perpetual sickness in the country’s power sector

Alexander Davis | ConsumerConnect

In view of the perennial electricity generation, distribution and supply challenges in the country over time, the Transmission Company of Nigeria (TCN) has stated that about N1.5tn intervention of the Federal Government in the power sector is not reflecting in the current performance of the industry.

The TCN noted the intervention was done to boost the performance of operators in the power value chain, but this had yet to improve the outputs of players in the space.

Edmund Eje, General Manager, Market Operations at TCN, Thursday, January 21, 2021, stated that one of the major reasons for this was the non-compliance with efficient payment of invoices issued electricity Distribution Companies (DisCos) as this had created a huge market gap.

The company’s General Manager, the virtual Power Dialogue in Abuja, FCT, said: “Apart from tariff gap, which occurs in every market from time to time due to the movement of some macroeconomic indices, we now have market gap.

“This market gap, which is as a result of the non-payment of 100 percent of the issued invoice, has become a perpetual sickness in the power sector.”

According to Eje, “that forced the Federal Government to come with subventions such as N600bn, N701bn and all that.

“This amounted to about N1.5trillion injected into a business that has been privatised.”

He further said: “It looks funny, but the government committed it to make sure that this privatisation works.

“However, this money is nowhere to have its reflection today within the performance of everybody in the value chain.”

The TCN official stated that one of the major problems confronting the sector was that the power distribution companies were sold to investors who lacked enough capital.

Most of those who officially took over the DisCos in 2013 borrowed funds from banks and were busy trying to repay the loans instead of strengthening their networks, he disclosed.

“On issues of funding, probably one could also blame the background on which these acquisitions were made. Firstly, in other climes, a public utility cannot be given to a single person to own.

“It cannot be given to someone who borrowed money from the bank. It is done through equity. It is understood that most of the acquisitions were done through credit, loans,” Eje stated.

The TCN General Manager added: “These loans became staggering weights on some of the Discos and it prevented them from reducing their ATC&C (Average Technical, Commercial and Collection losses).

“They couldn’t do it because their first charge now became banks’ charge.

“Otherwise they started well. If they had had enough equity when they started, probably the first thing they would have done would be to strengthen their networks because the distribution business is money minting if managed well.”