While electricity distribution companies (Discos) keep requesting the Nigerian Electricity Regulatory Commission (NERC) to approve their tariff increase applications, some Discos have been neglecting their own payment responsibilities.
In an exclusive interview with This DAY, the acting Chairman of NERC, Dr. Anthony Akah, disclosed that some Discos have been withholding their remittances to the Nigerian Bulk Electricity Trading Plc (NBET).
Akah said an average of nearly 30% in 2016 was not paid to NBET. He also underlined the upside in the energy sector, stating that generation companies (Gencos) have achieved more than the Discos in terms of upgrading their generation capacities since taking over from government in 2013.
He stated that this reluctance by the Discos has contributed to the sector's financial challenges, adding it is impacting on the operations of others in the value chain.
NERC outlines binding issues
Akah said: "By contract which the MYTO (Multi Year Tariff Order) represents, we are bound as a regulator to give the sector a tariff and undertake minor reviews as well, but there are some factors we are concerned about.
"One of them is that the distribution companies went to court to get a restraining order that has inhibited the checks and balances process we put in the market to ensure high level of operational discipline, high level of revenue remittances and also give confidence to all the players in the value chain."
He continued: "Presently, you cannot escrow the accounts of these distribution companies if they fail to remit monies they collected, and a review of their remittance level is very poor and does not align with their high level collections.
"As far as we are concerned, the distribution companies are retaining far more than they should to the detriment of the transmission companies and generating companies."
Akah concluded: "This is grossly unacceptable to the regulator and we believe that the court order which we are challenging may have contributed to this, but we are coming out with regulatory actions to instil discipline and protect other players in the market especially the generation companies to make sure they have some level of comfort and confidence to earn from the power they generate and be able to pay their bills."