The power Distribution Companies (DisCos) has said that out of the N1.8 trillion so far injected into the power sector, they have only accessed N58 billion loan from the Central Bank of Nigeria (CBN) N214bn loan facility, which is being repaid.
According to Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors (ANED), Barrister Sunday Odutan in a statement, the firms have never gotten any free money from the Federal Government.
He said this explanation is necessary to help in setting the records straight as there is a belief that power sector operators including the DisCos have been given N1.8trn free money by the Federal Government since the 2013 power sector privatisation.
At the opening session of a public hearing on “Power Sector Recovery Plan and the impact of COVID-19 Pandemic” by the Senate Committee on Power on Monday, the President of the Senate, Ahmed Lawan in his address said, “Government should not be giving free money. 1.8 trillion naira has been given to DisCos maybe in their books. The actual money might have been given to the GenCos.
“Government cannot afford to just spend money that you hardly understand why it is given and I will advise the Executive that next time, to give such money, bring it to the national Assembly for approval,” Lawan had said.
But ANED in the statement said only about three percent of the N1.8 trillion funding for the power sector has gone to the DisCos.
The association said CBN in 2014 provided N214bn Nigeria Electricity Market Stabilization Fund (NEMSF) but that the DisCos were only able to access N58bn of that till date, “and that is on the DisCos’ account books as collateral for our Letters of Credit (LC) which DisCos are repaying every month.”
The N214bn fund was not only for the DisCos but to all players in the power sector, including the GenCos, ANED said.
It noted that the federal Government gave the Payment Assurance Guarantee of N701.9bn to the GenCos in 2017 through the Nigeria Bulk Electricity Trading Plc (NBET) to help the power stations meet their gas obligations to sustain power generation.
Another N600bn was approved for the GenCos in 2019 through NBET for similar purposes. “However, the DisCos have only partaken in the N213bn NEMSF facility which is being deducted every month at source by CBN with about 10 percent interest rate for 10 years.”
ANED also reminded the government that at privatization, the N100bn commitment that was made by the government to cushion low pre-existing tariffs before commencement of tariff setting, was not implemented.
“The CBN NEMSF 1 fund was not a subsidy but a loan to address legacy gas debts and tariff shortfalls. The NEMSF Loans currently hamper DisCos’ balance sheets, worsened by the difference in Aggregate Technical, Commercial and Collection (ATC&C) loss as used in the Tariff Model in line with the reality.
“If the N100bn subsidy was given to DisCos, it would have reduced the liability of the DisCos for better services,” it noted.
The DisCos also decried cases of hardship caused by the COVID-19 pandemic. “As in other countries, recognition of hardship from COVID 19 should also be done by Nigeria. The Federal Government and its agents should embark on sensitization campaigns informing customers of the benefit of paying their bills and the need for cost reflective tariffs,” it advised.
FCCPC: Electricity Topped Consumers’ Complaints In 2020
The Federal Competition and Consumer Protection Commission (FCCPC) says it received the highest consumer related complaints from the electricity sector in 2020.
Speaking in Abuja on Sunday, Babatunde Irukera (pictured), chief executive officer of FCCPC, said the banking and telecommunication sectors ranked second and third respectively on the complaints chart.
He added that the aviation sector was ranked fourth.
“Our complaints resolution team is still a very small team of people and they are dealing with thousands of complaints,” Irukera said.
“We are looking at expanding capacity to have more hands handling the complaints but the real game changer in handling complaints better and faster is for companies to start doing it.
“The person who has the least open complaint in our resolution team has about 800 complaints across sectors and that is one person. If you multiply it by 12 to 15 persons, you will imagine the number of complaints.
“Being able to expand to a point where we are able to operate more efficiently, we will keep training, leveraging technology, the more we leverage technology, the more efficiently we can do our work.”
The commission was established by the 2018 Federal Competition and Consumer Protection Act (FCCPA) to promote fair, efficient and competitive markets in the Nigerian economy, facilitate access by all citizens to safe products, and protect the rights of all consumers in Nigeria.
FEC Approves CBN’s Request To Renovate National Theatre For N21b
Lai Mohammed, minister of information and culture, said on Wednesday that the Federal Executive Council (FEC) has approved a memorandum of understanding (MoU) between the Central Bank of Nigeria (CBN), and the ministry of information and culture for the renovation of the National Theatre in Iganmu, Lagos.
He spoke at the end the weekly FEC meeting in Abuja.
The federal government, on July 12, 2020, handed over the national theatre to CBN and the bankers’ committee to signify the kick-start of the renovation process.
“This is a landmark approval because, it has paved the way for investment in the creative industry as part of the resolve of this government to create at least one million jobs in the next three years in the creative industry,” Mohammed said.
“The CBN and banker’s committee are willing to invest N21.894 billion to renovate, refurbish and commercialization (run it profitably) of the national theatre complex. The MoU has a life span of 21 years after which it will revert back to government.”
The minister assured that no job will be lost after the national theatre is renovated, adding that the “brand new national theatre, an event centre” will instead create more jobs.
Asides from this, FEC approved about N9.43 billion to complete the digital switch over (DSO) in broadcasting; N8.98 billion for a new national ICT park in the federal capital territory (FCT) to coordinate public and private ICT hubs in Nigeria.
The council also approved a new national policy on aging which would take care of the needs of the aged people across Nigeria; approved the ministry of water resources memo to construct Damaturu water supply project in Yobe state worth N8.43 billion.
Adesina identifies Debt Service As Greatest Risk To Nigeria
The President of African Development Bank (AfDB), Dr. Akinwunmi Adesina, has warned that debt service is Nigeria’s greatest risk, even as he urged the federal government to take steps to increase tax revenue in the face of dwindling oil income.
The Director of Communications and Liaison of the Federal Inland Revenue Service (FIRS), Mr. Abdullahi Ahmad, stated that he spoke virtually at the recently held First Annual National Tax Dialogue .
Dr. Adesina was quoted as saying that due to the impact of the COVID-19 pandemic, Nigeria’s economy shrank “by 3% in 2020 on account of falling oil prices and the effects of the lockdowns on economic activities,” adding, “with shrinkage in oil revenues, debt service payments pose the greatest risk to Nigeria.”
He stressed further that for Nigeria to overcome the pandemic, “taxes must form a significant percentage of government revenue. Digitalization of tax collection and tax administration is critical to ensure greater transparency of the tax system, widening of the tax base, while mitigating compliance risks and encouraging voluntary tax compliance.”
Tax experts and stakeholders at the event called for the automation of tax collection by the FIRS through data and intelligence in order to ease tax collection, as well as, improve revenue.
Executive Secretary, African Tax Administration Forum (ATAF), Mr. Logan Wort, harped on the place of technology in generating revenue for the country in a post-Covid economy.
Mr. Wort, who joined the dialogue virtually from South Africa, stated, “Domestic Resource Mobilisation (DRM) is expected to contribute at least 75% to 90% on average per country” in the post-Covid era, adding that Nigeria and other African countries should note, “improved tax revenue will have to take prime position” in the scheme of things.
He urged Nigeria to pay serious attention to e-commerce and the digital economy sector where big, trans-national digital conglomerates like Google, Netflix and Uber operate and make huge, tax-free profits as a possible way of increasing tax revenue generation.
He said Nigeria should borrow a leaf from Ghana in e-commerce taxation, projected to fetch Ghana $450 million in annual tax revenue.
Ekiti State Governor, Dr. Kayode Fayemi, who was chairman of the Dialogue, was quoted as lauding the FIRS “for its performance in the 2020 fiscal year, despite operating in the most challenging period. The Service not only collected N4.9 trillion in taxes, achieving 98% of its target; only 30.6% of this was attributed to Petroleum Profits Tax, from what used to be over 50%”.
He urged participants to, “interrogate how Nigeria can further deepen the use of technology to improve tax compliance nationally and across sub-nationals.”