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All Discos are to be audited before Siemens deal – Council



The National Economic Council has stated that there will be need to carryout technical and financial audits of the electric distribution companies in the country before the interventions by World Bank, Siemens and others.

The Federal Government and Siemens AG signed a memorandum of understanding on the Nigerian Electrification Roadmap in July 2019, with the purpose of boosting electricity generation in the country to 25,000 megawatts in 6 years.

NEC’s ad-hoc committee on Ownership Review and Analysis of Discos and Electricity Sector Reform, in it’s report, it said the power sector had performed below expectation due to the challenges faced by the power sector.

It said part of its challenges are misalignment between the investors, non implementation of cost reflective tariffs, under investment in infrastructure and poor implementation of contracts.

It said that observations from the Nigerian Electricity Regulatory Commission’s open book review showed major governance problems across all Discos, along with procurement failures, related party transactions and lack of value for money in technical agreements.

It also expressed that the assumption that affects its liquidity in the market and the capacity of Discos to make needed investments like that of level meeting, aggregated technical, collection and commercial losses, capital expenditure allowance we’re inaccurate during the privatisation.

It said the bidders selected did not carryout due diligence on the condition of infrastructure and finances of the successor of distribution companies which had led to misalignment on what was needed to turn Discos around.

Based on reports, it was understood that the NERC has always fixed tariff belie cost, resulting in failure to implement regulatory rules and contracts and continuous government subsidies to the market that accommodate the financial position of Discos and their to raise capex funding.

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It started that, across different levels of  value chain, cases have continued to occur with none compliance with contracts and NERC regulations without appropriate punishments, which reduces investors confidence in the market.

The lack of take or pay responsibility on Discos for energy suppliedtogether with the direct interference by the TCN in Disco’s despatch combine to make repeated load rejection by Discos, which creates financial liability for NBET and also jeopardizes grid safety and reliability.

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