26 November 2012

Nigeria: Yola Power Company Cries for Bailout - As TCN Withdraws Lifeline

The Yola Electricity Distribution Company (YEDC) faces imminent collapse due to huge financial constraints, Daily Trust has learnt. YEDC, which is one of the 10 distribution companies drawn from the unbundled Power Holding Company of Nigeria (PHCN) is so broke that it is now difficult for it to pay its workers.

For months, it has not been able to remit its dues to the Transmission Company of Nigeria (TCN) which is the market operator. Instead, the TCN has been giving it a lifeline to augment shortfalls in revenue to run its operations. But that lifeline has been withdrawn now, Daily Trust check revealed.

The Yola DISCO is responsible for distributing electricity to four north eastern states of Adamawa, Borno, Taraba and Yobe. Sources with knowledge of the problem told Daily Trust that the situation resulted from the low load allocation to the DISCO from the national grid, leading to abysmally poor power supply to electricity consumers in the area.

The poor security situation in the area has led many businesses who patronise the company to close shop and there seems to be no end in sight yet, investigations by Daily Trust show.

A source told Daily Trust that staffs of the company have been attacked in recent times, leading to the death of two workers. This has heightened workers' fear in the course of discharging their duties.

The big customers including banks and industries have reportedly disconnected from the services of the utility due to the near absence of power supply. This has compounded the woes of the company's finances.

Another reason for the situation, according to Daily Trust source, is the poor revenue collection drive of the DISCO. There is poor metering and billing system in place and incidences of electricity theft, occasioned by meter bypassing, Daily Trust further gathered.

In view of its predicament, the management of the company is desperately asking the federal government for a bailout which is a new concept in the Nigerian electricity supply industry.

A source in the ministry of power who does not want to be mentioned confirmed that the management of the Yola DISCO requested for a bailout, but expressed doubt if they would get one.

"There is no assurance they would be able to pay back. If they can't even recover debts at the moment to improve their books, then there is little hope that they would be able to pay up if they get any bailout," the source in the power ministry said.

In an interview with Daily Trust, Dr Sam Amadi, chairman and Chief Executive Officer of the Nigerian Electricity Regulatory Commission (NERC) which regulates Nigeria's electricity industry denied that load allocation to the DISCO was low. He said technical challenges leading to poor revenue as well as some element of insecurity were to blame.

"The load allocation has been increased. In fact, they cannot even take the allocation given to them because the network has got a challenge. When they get better transformers to stabilize their network, they can get additional load," he said. According to Amadi, "the market operator had been intervening to raise the distribution company but we have written to the operator to stop it because the Multi Year Tariff Order (MYTO) fund is for market participants. If the market operator keeps taking money from the fund to raise the DISCO which is not able to meet with its financial commitment, it would affect other participants and the entire market."

He said the technical issues within the purview of the commission and ministry of power were being addressed through the provision of more transformers and meters to help strengthen the network and improve the revenue collection drive.

The NERC chairman said, "the matter has got to the highest level and has been discussed by the National Economic Management team. "The DISCO has been having problems. They have challenges of network, low voltage, and some element of insecurity. Due to the technical challenges giving rise to low voltage, many of their customers are negatively affected and have therefore got out of the grid. That has made them to lose revenue."

When asked if the power sector reform roadmap provided for bailout for market participant, Dr Amadi said government could only help pay up in case of serious emergency such as insecurity to ensure there is light. But the problem with the Yola DISCO is not only about insecurity.

He said the challenges are being addressed by the federal government. "We have recommended to the government to provide transformers, meters and other technical facilities to help it out of the low voltage challenge in the area. The meters would assist in revenue collection if they are having problems going out to collect it," he said.

Engr. M. S Roro, Chief Executive Officer of the Yola DISCO declined to comment when our reporter reached him on telephone, insisting that he wanted to physically identify the reporter. "Anybody can claim to be a journalist with Daily Trust," he said, adding "it's not something I will be discussing with somebody I am not able to establish his true identity. You can come or send a representative and we would then listen to your questions, if it's the ones we can respond to, we would do so."

Later when the Yola correspondent called him to request for a one-on-one interview, he said he was out of Yola. He said he should be contacted this week.

The Yola Electricity Distribution Company is one of the companies put up for sale in the ongoing power sector reform by the federal government. The National Council on Privatisation (NCP) recently declared Integrated Energy Distribution and Retail Marketing Limited, which is chaired by former military head of state General Abdulsalami Abubakar (rtd) as the preferred bidder for the Yola utility.

It is not clear yet how the present finances of the DISCO would affect the transaction. In April this year, electricity consumers in the zone lamented to a committee on metering set up by the Nigerian Electricity Regulatory Commission (NERC) over what they described as absence of power supply.

The committee led by human rights lawyer, Bamidele Aturu, has since submitted its report to the commission. The DISCO's customers had complained bitterly about what they described as unfair distribution of electricity in the area. They alleged that electricity was being enjoyed by a privileged few, based on who is able to pay and earn dedicated direct supply, which they termed 'hotline.'

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