Yemisi Izuora/Ijeoma Agudosi
The management of Ibadan Electricity Distribution Company (IBEDC) has sought the speedy settlement of N5.9 billion owed by government agencies and the military formations to date.
Mr John Donnachie, the Managing Director of IBEDC disclosed this to journalists yesterday against the back drop of the proposed increase on electricity tariff expected to take off by February 1.
Donnachie stated that though, implementing the new tariff will be challenging, the company has to be honest and open to its customers on the need for review on electricity tariff, adding that current tariff was not demand cost reflective.
He said that the company would abolish fixed charges under the new tariff regime introduced recently by the NERC.
According to him, removal of fixed charges by government is a welcome development which will benefit the customers a great deal.
“Presently, government agencies owe us N5.9billion. Out of this debt, the military owe us N4billion as at July 31, 2015, and this is affecting our operations” he lamented.
He said that the Discos are like revenue collectors for other stakeholders along the electricity value chain, adding that after collecting the revenue the company retains 25 per cent and disburses 75 per cent to the Generation companies (Gencos), Transmission Company of Nigeria (TCN) and the regulators.
“We need to invest fund in the sector to improve our distribution networks and provide for adequate metering system.
The liquidity issues make it difficult to resolve the problems of inadequate generation and transmission constraints. More importantly is the fact that distribution companies are unable to meet the operational costs of distributing power to their numerous customers, payment to generation and transmission companies, let alone their capital investments,” he said.
In his comments, the Deputy Managing Director, IBEDC, Mr John Ayodele, noted that the capital expenditure allowed for IBEDC is inadequate for its operations.
He said that especially given the size of its metering and network improvements and upgrade requirement as well as reduction of Aggregate Technical, Commercial and Collection (ATC&C) losses.
“The reviewed tariff will assist us to quickly address the problem of estimated billing which today represents over 70 per cent of customers’ complaints and has been one of the reasons for various protests experienced since we took over two years ago.
In view of the above, we have to provide funds upfront to pay for investment made each year and expects to recover the same plus any interest over the life of the assets,” he said.
To ensure effective metering of its numerous customers, Ayodele said that IBEDC has placed order for about 100,000 units of prepaid meters that were intended to use for its customers in 2016 to resolve the problems of estimated billings.
He said that about 300,000 prepaid meters is expected to be installed in 2016 to eliminate issue of estimation billing within its operations.
“We require N7.5billion annually for metering and N3billion annually for network expansion, but we need fund to do that and we are pleading with the government ministries, departments and agencies including the military to help us settle their debt for us to serve them better ahead of the implementation of the new electricity tariff in which the controversial fixed charges have been eliminated.
The 11 discos have been calling on their debtors, especially the government agencies and the military to pay up their debt.
This is because for decades, the power sector has been characterized by same set of challenges ranging from lack of funding, inadequate power supply” he explained.
Ayodele said that besides the value chain inefficiencies, about 50 per cent of power bought is not paid for due to power theft.