Babatunde Fashola
Friday Olokor and
Okechukwu Nnodim
The Minister of Power, Works and
Housing, Mr. Babtunde Fashola, on Monday alleged that the managers of
some power distriubtion firms were awarding inflated contracts to their
relatives.
He also threatened to sanction the firms for their continued inability to deliver on agreed terms.
While condemning the recent statements
by the firms, a visibly angry Fashola declared that the power firms had
failed in many aspects.
According to him, allegations of
obsolete infrastructure in the power sector by the companies are
unnecessary because they were aware of the state of the facilities when
they purchased the assets.
The minister, who spoke during the 15th
monthly meeting of power sector stakeholders in Jos, Plateau State, also
demanded that participants should cast a vote on whether to carry on
with the meeting every month or to put an end to it, as he expressed
worry over the poor attendance at the forum.
Fashola was particularly pained by the
actions of the power distribution companies, who according to him, are
bent on frustrating the stakeholders’ meetings, adding that the Discos
had failed in providing meters and electricity feeders, as well as
remitting very poor revenue to the market and making false allegations
against the government, among others.
The minister, who chaired the meeting,
also lamented the electrocution of seven persons at a football viewing
centre in Calabar, Cross River State recently, and blamed it on man-made
errors of the power companies.
“Whilst the accident is regrettable and
the consequences very saddening, they were clearly man-made and
avoidable; and if we must learn any lessons from the accident, it is to
honestly and truthfully admit that it occurred as a result of
non-compliance with laws and regulations,” he said.
On how the Discos frustrate efforts of
the government, Fashola said the firms had formed themselves into an
association of power distribution companies and had persistently issued
statements on issues they either did not present for discussion at
meetings, or which contradicted the communiqué jointly agreed and
released after each meeting.
The minister, however, declared that his
ministry reserved the right to recognise or deal with the Discos as a
body, adding that the Nigerian Electricity Regulatory Commission and the
Nigerian Bulk Electricity Trading Plc would communicate a similar
position to the firms.
Picking on the issues raised by the
Discos in their statements, Fashola said the firms alleged that attempts
to escrow their revenue accounts would amount to nationalisation or an
intrusion into their business, but failed to state that the condition
was agreed by the firms with Central Bank of Nigeria.
He stated that the agreement between the
Discos and the CBN was a condition for the bank to offer the firms
stabilisation funds by way of loans to fund the business they invested
in because commercial banks were reluctant to do so.
Fashola said, “What you (Discos) also
failed to state was that the loan was at 10 per cent interest, which is
well below the commercial rate. What you also failed to state is that
you also agreed under that arrangement to establish letters of credit to
guarantee future payments to the NBET and Transmission Company of
Nigeria’s Market Operator, that the agreed commercial terms of the
letters of credit authorises the NBET and the Market Operator to draw on
the letters of credit for any default in payment to them, and that such
defaults have occurred and continue to occur.
“Any right-thinking person will accept
the principle that any person lending you money must have the right to
know what you are doing with the money, especially when under-collection
and underpayment have been a major feature of many Discos’ performance.
“As far as the regulation on your
procurement is concerned, what the public needs to know, which your
statement was silent on, is that you are entitled to fully recover your
costs and investments by law, and this is the function of how tariffs
are calculated.”
The minister said the government had 40
per cent stake in the Discos and that it had a duty to ensure that they
buy parts and other equipment at reasonable and competitive market
prices, and “not through inflated contracts to relatives as we have seen
in some Discos in respect of which NERC will take action in due course
and sanction those who are involved.”
He added that many of the firms had
failed to invest in feeders and distribution equipment to get power to
consumers, noting that this had led to load rejection in an economy that
did not have enough electricity.
“Your statement does not address the
ill-logic of standing in the way of a consumer seeking to get by himself
what the service provider has failed or is unable to give him,” Fashola
said.
On corporate governance at the Disco
level, he stated that the power firms had failed to provide up-to-date
audited financial statements as required by their licences.
The minister said, “If a company cannot
produce all the records of its transactions and accounts, does that not
allude to gaps in its governance? Does the fact that consumers go beyond
their service provider who collects the money monthly to complain to
government, who does not collect money for their power, not call for a
look in the mirror about your corporate governance?
“Good corporate governance will ignite
the conscience of an electricity business to first provide meters to its
customers before seeking tariff increase, so that a metered consumer
will at least have the ability to fairly measure from his meter how he
is being billed.”
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