- As CBN orders banks to take over electricity bills’ collection
Electricity Generation Companies, GenCos, have demanded immediate settlement of huge debt owned them by the Nigerian Bulk Electricity Trading Plc, NBET.
Executive secretary, Association of the Power Generation Companies, Joy Ogaji, told LEADERSHIP that the debt presently is above N1 trillion.
Ogaji, described the debt as a huge burden and significantly threatening their viability and undermining their ability to make further investments.
According to her, the deal between NBET and the GenCos is such that NBET buys the electricity in bulk straight from the GenCos through Power Purchase Agreements (PPAs). Thereafter, it is sold through vesting contracts to the DisCos, which then supply it to the consumers.
Ogaji expressed displeasure and fear about the survival of the industry while saying that since 2013 NBET had accumulated so much debt.
Her reaction is coming on the heels of a circular by the Central Bank of Nigeria (CBN), asking banks to take responsibility for collecting electricity bill payments.
But Ogaji, said the Association is still studying the development and would make its position on the issue public soon.
In a circular dated August 21, Bello Hassan, CBN’s director of banking supervision, said taking over from electricity distribution companies will improve payment discipline in the industry.
“The payment or settlement for all NESI related goods or services shall be made through the Nigerian banking system,” the CBN’s circular read.
“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; 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)
“All energy and non-energy collections of DisCos, whether cash or cashless, shall only be performed by deposit money banks (DMBs). 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 authorizing DMB. Any DMB found to be maintaining any account(s) for any entity collecting payments on behalf of any DisCo without appropriate authorization shall have regulatory actions imposed on it.”
The apex bank also directed that banks providing bank guarantees to Nigeria Bulk Electricity Trading (NBET) Plc and the Transmission Company of Nigeria (TCN) on behalf of DisCos, would take full responsibility for the collections and the remittances of the DisCos to both NBET and TCN.
“For the avoidance of doubt, no DMB is permitted to open or continue to maintain a collection account for a DisCo without the express no-objection of the DMB that guaranteed its exposure to NBET or TCN,” CBN said.
According to the latest quarterly report of the Nigerian Electricity Regulatory Commission (NERC), the collection efficiency by the DisCos is low and has continued to adversely impact the financial liquidity of the industry.