By Sunday Ochai
Usman Mohammed, MD, TCN.
As Federal Government continues to take steps at ensure stability in the nation’s power sector, the Managing Director, MD of Transmission Company of Nigeria, TCN, Mr Usman Gur Mohammed has advised for proper capitalization of the Distribution Companies, DISCOs to match the investments being made in the transmission segment.
The MD gave the advice while chatting with reporters in Abuja saying that the 11 power Distribution companies (DisCos) would require 4.3 trillion dollar capitalisation fund to match the investments being done in the transmission section. It could be recalled that TCN had attracted about $1.32 billion multilateral funding and is executing projects targeted at attaining 20,000MW energy wheeling capacity by Year 2021.
Mr Mohammed listed various government interventions for DisCos and Generation Companies (GenCos). He said: “Nigeria has supported the power sector with N213bn CBN Power Sector Intervention Fund, N701bn CBN payment Assurance Fund, and now FGN is considering approving N600bn payment assurance.”
He said upon approval of the N600bn intervention, the total direct support to the power sector as result of illiquidity will be N1.5trn. However, this support does not cover transmission shortfall but as a result of the DisCos’ inefficiency and lack of capacity to collect revenue for the sector, Mohammed noted. Since the interventions are not yielding results, Mohammed said, “DisCos must be capitalized with at least $4.3 trillion (with government paying its own share of the 40%), defined with at least five year interest grace period and at least 10 years repayment period.” Owners of DisCos must also bring their 60% of the specified capital.
He urged the Nigerian Electricity Regulatory Commission (NERC) to operate effectively and provide cost effective tariff and execute normal tariff reviews. He noted that government should review the operations of the Nigerian Bulk Electricity Trading plc (NBET) with a view of closing it because it was to serve in the interim of privatisation. “The books of the DisCos should be reset to make them clean and attractive. These will lead to sustainable power sector,” Mohammed submitted.