- DisCos, as power distributors are known, were said to have owed both Nigeria Bulk Electricity Trading (NBET) Plc and the Transmission Company of Nigeria (TCN) over N930 billion in outstanding payment for power supply to them
Nigeria has directed commercial banks in the country to take over collections of electricity bills with immediate effect in a bid to recoup outstanding debt owed by electricity distribution companies (DisCos) to power generating firms.
Analysts said the move made by the Central Bank of Nigeria (CBN) is a reminiscence of appointment of liquidation agents or receiver managers to wind down the operations of debtor companies or firms that have declared bankruptcy.
DISCOs, as power distributors are known were said to have owed both Nigeria Bulk Electricity Trading (NBET) Plc and the Transmission Company of Nigeria (TCN) over N930 billion in outstanding payment for power supply to them.
The debt to state-owned NBET, which buys electricity in bulk from generation companies through Power Purchase Agreements and sells through vesting contracts to the Discos, which then supply it to the consumers was put at N622.4 billion in addition to N308.2 billion in interest charges.
The eleven distributions companies have failed to regularly remit costs of electricity purchased from the government-owned company leaving the government with no choice to pursue debt recovery through other means, sources said.
The CBN intervention is said to be government response to keep the sector going and also part of fulfilling part of the conditions by the World Bank before it can grant the country about $1.5 billion facilities to support this year’s budget.
In a circular signed by Bello Hassan, CBN Director of Banking Supervision, the regulatory bank said banks are also expected to be in charge of the remittances of the Discos payment to both NBET and TCN.
The CBN said the measure was in tandem with a directive of the Power Sector Coordination Working Group to improve payment discipline in the Nigerian Electricity Supply Industry (NESI) and to boost the overall quality of electricity generation, transmission and distribution.
“Consequently, all collections for the payments of NESI regulated goods and services provided by a Disco shall be paid into a designated account such that: collections arising from services rendered by the Disco shall be paid into an account in the sole name of the Disco and collections arising from services rendered by a third party/parties on behalf of the Disco shall be paid into an account in the joint name of the Disco and the third- party vendor(s).”
The CBN also said all energy and non-energy collections of Discos, whether cash or cashless, should only be performed by the banks.
“No entity shall be permitted to collect revenues for Discos except if that entity is so authorised by a DMB in line with the relevant CBN guidelines for agent banking and agent banking relationships, therefore: the DMB shall be permitted to authorise its agents to collect energy and non- energy payments on its behalf for any Disco; the actions or inactions of the agent shall be the responsibility of the authorising DMB and any DMB found to be maintaining any account(s) for any entity collecting payments on behalf of any Disco without appropriate authorisation shall have regulatory sanctions imposed on it,” the CBN wrote in the circular.
The CBN directed banks to work with relevant stakeholders to ensure that all electricity customer payment channels/endpoints identify electricity market payments in such a way as to provide the identification of these payments and information relating to the Disco as well as the Disco account information such as account ID, customer ID, meter ID, among others.
“All Disco collections (cash and cashless) shall be regarded as an energy collection and, unless identified otherwise, shall be swept automatically into a Feeder Collections Account (FCA) in the sole name of the Disco.
“The proper classification of accounts (into energy and non-energy) shall be the responsibility of the Disco and DMB that guaranteed the Disco or its designate bank.
“AII Disco non-energy collections shall be paid into a designated account in the name of the Disco provided that: non-energy collections arising from services rendered by the Disco shall be paid into an account in the sole name of a Disco and non-energy collections arising from services rendered by a third-party vendor on behalf of a Disco shall be paid into an account in the joint name of the Disco and the third-party vendor,” it said.
The CBN ordered banks to ensure that bulk purchasers/resellers of energy maintain a dedicated and segregated account per Disco for customer energy collections for that distribution company.
The financial institutions are also to ensure that bulk resellers maintain records of energy sales and make such records available monthly and on demand to the CBN, the Nigeria Electricity Supply Industry Stabilisation Strategy Limited or any other CBN-designated entity,
It directed bulk resellers not to open or close any account for energy collections without authorisation by NESI SS Ltd or any other CBN-designated entity.
Banks are also required to provide on a monthly basis and on demand, details of all accounts maintained by their agents and all third parties involved in energy collections or resale (i.e. bulk resellers, Agents, etc.) for inspection by the CBN, NESI SS Ltd or any other CBN designate.
“Supervised entities acting as financing agents for the purchase of energy, or similar, shall only charge fees in line with CBN regulations,” it stated.
