As the power sector crisis continues, the Federal Government, yesterday, assured that the N247 billion legacy debts accumulated by Ministries Departments and Agencies (MDAs) and the barracks would be defrayed before December 31, 2022.
Speaking during a presentation to mark the launch of the website of Power Sector Recovery Programme (PSRP) in Abuja, Mr Belije Madu (of the PSRP secretariat) explained that the tariff shortfall payment has been cut down from a historical accumulation of N1,891 billion to N247 billion in 2021, and is on course for elimination by December 2022.
Although there are different types of legacy debts which include tariff shortfall, market shortfall and MDAs’ legacy debts, he emphasised that the MDAs’ legacy debts would be defrayed this year while other debts are still pending.
” When we say tariff shortfall, what we mean is that if the tariff is N10 and everything the market can charge is N8, we have a tariff shortfall. Again, when we say market shortfall, it means that we have supplied electricity of N10 to Nigerians and we were only able to collect N8. That’s market shortfall. When we say MDA legacy debts, what we mean is ministries departments and agencies as well as barracks took electricity and refused to give money to the DisCos”. He, therefore, assured that the MDAs’ legacy debts would be paid this year.
Madu also revealed that the total Performance Improvement Plans (PIP) investments are envisaged to be approximately N871 billion across the 11 DisCos, with funding from DisCo financing and government interventions.
On what led to the Aggregate Technical Commercial and Collection Costs (ATC&C) which is the difference between the amount of electricity received by a distribution company from the transmission company and the amount of electricity for which it invoices its customers plus the adjusted collection loss, Chairman of Nigerian Electricity Regulatory Commission (NERC), Engineer Sanusi Garba, said that between 2005 and 2010, after the launch of roadmap to power sector reform, it was discovered that the intentions of government (as per regular supply of electricity) were not met. So, there was a massive privatisation of the sector and agreements were signed between the generation companies and the DisCos.
“In 2010 the government launched the roadmap to power sector reform. The reason is that between 2005 and 2010, things were not working out according to the intentions of government. Eventually in 2013, there was a massive privatisation that took place. During the privatisation, some agreements were signed between the Bureau of Public Enterprises (BPE) and the generation companies. They were required to recover loss capacity and a number of Key Performance Indicators (KPIs) were issued for them. For the distribution companies (DisCos), it was a little bit more complex in the sense that they have what we call loss reduction trajectory which led to ATC&C for a period of five years” he said.