DISCOs Debt: NBET Threatens To Enforce Payment | Independent Newspapers Limited
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DISCOs Debt: NBET Threatens To Enforce Payment

Posted: Jul 14, 2015 at 12:48 am   /   by   /   comments (0)

Following three months of consecutive indebtedness by Electricity Distribution Companies, the Nigerian Bulk Electricity Trading Limited (NBET) has indicated that it may activate Letter of Credit (LC) from local banks presented to it by the Discos as guarantees for energy supplied.

NBET also known as the Bulk Trader in the electricity market in a notice of payment demand it issued to the 11 Discos requested for the immediate payment for capacity and energy invoiced for February to April 2015.

The Bulk Trader acts as an intermediary between the electricity generating companies (Gencos) and the Discos, by entering into power purchase agreement with the Gencos and vesting contract with the Discos.

It explained in the notice that Discos are not complying with the 100 per cent energy payment mandate expected in the Transitional Electricity Market (TEM) rules.

NBET explained further that on the average the Discos payments for the corresponding months were 80 per cent in February, 70 per cent in March and lower than 54 per cent in April.

It claimed that the balance of 20 per cent, 30 per cent and 46 per cent are however yet to be paid by the Discos.

The company stated that it is taking the first step through the notice in seeking compliance by the Discos, noting that failure to arrest the trend will worsen the cash crunch in the power sector.

It therefore urged the Discos to comply with the TEM rules that orders 100 per cent remittance of energy payment by completing their payment.

The Bulk Trader also said failure to comply would mean it using the payment security, bank guarantee already issued by eight Discos in their Vesting Contracts (VC) to settle the outstanding invoices.

However, the three other Discos without the guarantees would have their revenues escrowed if they default by Friday thereby completely crippling their distribution activities as directed by the TEM’s supplementary order.

It is understood that the least of the Discos pays up to N350 million for its monthly energy allocation and could pay higher if has more power in the month.

Abuja Disco had said that in March, it paid N470 million for taking more power as against the N380 million it paid for normal allocation in January 2015.

According to an official, the Discos owe over N10 billion in their deficit energy balances, adding that without such differences, the Bulk Trader has been constrained to bridge the gap and pay the Gencos.