Why Power Sector Will Continue To Experience System Collapse


Stakeholders in the power sector have said the inability of the electricity distribution companies to remit money to the Market Operator coupled with bad governance will make system collapse to persist in the industry.

Some of them have argued that the main problem of the sector is lack of capacity from Regulators, Minister, Minister of state, heads of parastatals like Nigeria Bulk Electricity Trading (NBET) Bureau of Public Enterprise( BPE),and Transmission Company of Nigeria (TCN) . They said, in fact, all current heads of parastatals are the worst the industry have had in recent times. That is also why the sector is like this.

They are of the view that if the money  that are  meant for other operator along the power value chain are denied  them by the discos, Nigerians must expect chaos in the system, as the other stakeholders need money to sustain their businesses and other obligations.

They blamed the leadership of the Transmission Company of Nigeria for its failure to live up to its responsibility as regards revenue drive in the sector.

According to them, the Market Operator which is part of TCN is supposed to be going after the discos to ensure that they remit the needed money for supply given them, but the current headship of  TCN is said to be foot-dragging in following up with the discos to ensure that they pay for the services rendered to them.

  “At the heart of this matter of frequent system collapse is the lack of remittance of revenue from the electricity distribution companies. This situation has adversely affected the generating companies and others, including TCN itself, that they are not able to carry out their obligations. The gas transaction between the generating companies and gas suppliers is cash and carry,” a former executive director of Power Holding Company of Nigeria said.

Other Industry operators who spoke in support of this view,  agreed that unless the issue of revenue remittance is resolved with the distribution companies and they honour their financial obligations as at when due, Nigeria will keep having the problem.

“Market operator which is part of TCN is one to collect the money which is shared among the stakeholders. But what is actually happening is that what is coming to other stakeholders is low. Some of them cannot meet their obligations, another industry operator said.

This they said was not the situation when the immediate past managing director of TCN, Usman Gur Mohammed, was there.  The former managing director who was believed in some quarters to have been removed by  Discos who gang up against him because of the way he was pursuing them to collect his money, was a thorn in the flesh of the discos.

In some instances, they said he would deny some of the discos supply in order to collect his money.

They alleged that while he was fighting the discos for his money, the then minister of power was supposed to be supporting him, was busy romancing the discos.

Since his exit things have changed for the worse in the industry, a source said.

“He never tolerated the idea of discos collecting money and they are paying peanut. He was forcing them to pay, but this one.”

The current managing of TCN,Sule Ahmed Abdulaziz, is said not to really push full in respect of the money owed other industry operators by the discos.

 They alleged that he is perhaps afraid because his appointment is yet to be confirmed.  May this would explain why he is not push full in his dealing with the discos.  He is alleged to be afraid to step on toes, hence the lack of seriousness being displayed by the discos.

 One of the sources in the industry described what is happening in the industry last one year as terrible, stating further that the industry may collapse if things continue in a current manner. “Since the new managing director of TCN assumed office, he has not impressed the operators. The generating companies he said cannot continue the way they are doing because they need money to pay for gas suppliers and pay staff salaries.”

They said until when the government steps into the matter in the industry by either giving money to generating companies or it begins to wield the big stick to make the disco pay, the challenge of system collapse will persist

 Another source told  Business Standards that at a recent meeting held with the in-house union in TCN, the managing director was alleged to have declare to the union  how bad the financial situation of the company was because the discos failed to remit revenue to the Market Operator.


By Olusola Bello

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