Business

Why DisCos can’t recapitalise, by group

The 11 power distribution companies (DisCos) cannot recapitalise due to inappropriate pricing regime in the sector, the Association of Electricity Distributors of Nigeria (ANED) Executive Director, Research and Operation, Mr Sunday Oduntan, has said.

In an interview with The Nation in Lagos, he said only Edo and Ekiti state governments have criminalised energy theft, by ensuring that House of Assemblies passed the bill into law.

He urged the DisCos management to report any staff member caught committing any crime to association for punishment.

He advised other states to emulate Edo and Ekiti, adding that by doing so, ANED would not find it difficult to solve the problem.

One kilowatt of electricity  (KWh) is N32, a development, which has resulted in a shortfall of N48 from N80, the expected price of the product.

On calls by the Transmission Council of Nigeria(TCN) Chief Executive Officer, Mr Usman Mohammed, that the power firms should recapitalise, he said such calls were unnecessary, considering the illiquidity in the sub-sector.

He stressed that it is impossible for the Discos to invest where they cannot recoup on time.

Oduntan said:  “The references to recapitalisation are misleading and unrealistic, without taking into consideration the ability to recover the capital injection.

”In the absence of appropriate pricing of the product (electricity), the power distribution firms cannot recapitalise. The reason is because any capital the firms provide. They must be able to recover the cost of ploughing their capital into  the sector. How would they recover their cost, when their product is under-priced and undersold? The calls for recapitalisation are misleading, unwarranted and mischievous narratives by the TCN Boss.”

According to him, the firms are increasingly find it difficult to perform well due to debts owed them.

He noted that the firms are owed by many institutions, including the Ministries Departments and Agencies (MDAs), adding that the firms are yet to recover many of their debts.

Besides poor pricing regime, he said the operators were battling payment for electricity.

He said the problem is affecting  the sector’s growth.

Also, Oduntan said the transmission segment of the industry is still not in good condition, despite the  the Federal Government’s effort to improve it.

The grid, Oduntan said, is weak and has collapsed many times.

“The grid needs to be strengthened.There is need for more investiments to improve the grid. That has always been there. Lots of equipment have been diaplidated and it is good to mention that the government of Preident Muhammadu Bauhari is trying its best to improve on TCN.’’ he added.

Powered by WPeMatico