Auditors Report Huge Loss, Fear Collapse Of DisCos
Financial auditors engaged by some of the electricity Distribution Companies (DisCos) such as PriceWaterhouseCoopers (PWC) and Deinde Odusanya and Co have expressed uncertainty over the continued existence of the companies as they declared huge operation losses in two consecutive years ended December 31, 2015 and 2016 respectively.
In their separate submissions to the companies, copies of which were submitted to the Nigerian Electricity Regulatory Commission (NERC), PWC had doubt over Jos and Enugu DisCos on their ability to continue as business entities as they were heavily indebted.
Jos DisCo incurred N16.8 billion losses in the 2016 financial year and N22.2bn liabilities. PWC reported N31.1bn losses for Enugu DisCo against N26.4bn declared in 2015; it reported N49.8bn in revenue in 2016, N45.6bn for 2015. With the huge loss, the audit firm again raised doubt over its sustenance.
For Ibadan DisCo, Deinde Odusanya and Co. reported current liabilities exceeding its total assets by N38.05bn in 2016 against N2.68bn in 2015. There existed uncertainties that may cast doubt on their operation then. The DisCo had N24.9bn in 2016 having raked in N61.3bn; it had N11.2bn loss in 2015 and N61.4bn revenue.
The same audit firm reported liabilities exceeding assets by N8.5bn in 2016 and N0.57bn in 2015 for Yola DisCo.
Jos DisCo had recorded N11bn revenue and loss profit of N7.6bn. PWC said the DisCo incurred N16.8bn loss which raised business sustainability concerns.
For Eko DisCo in Lagos, there was a loss N28.66bn despite revenue rise from N51bn to N56.5bn for 2016 against N6.58bn reported in 2015. More energy boosted its revenue but the cost of buying the energy increased due to the intake of embedded generation from Egbin Power Plc and Paras Energy.
It recorded current liabilities exceeding its assets by N21.8bn; net asset at N3.1bn.
Benin DisCo in a brief summary submitted to NERC, declared N11.6bn loss in 2016, having earned N50.4bn. it was higher than N4.4bn loss recorded in 2015 and income of N37bn.
Kaduna DisCo declared N17.9bn loss in 2016 against N12bn the previous year. It recorded N42.8bn revenue against N33.5bn in 2015.
As at December, 2017, the 11 DisCos said their financial shortfalls in the electricity market had reached over N1 trillion due to nonpayment of legacy debts, MDAs bills and others.
In his comment, the National President, Senior Staff Association of Electricity and Allied Companies (SSAEAC), Mr Chris Okonkwo said the development was worrisome, adding that the DisCos as they were under the defunct Power Holding Company (PHCN) performed better than the privatized firms.
He said under PHCN, there were capable hands to collect revenue but since privatization, almost 80 per cent of them have been sacked.
“The owners of these companies, both GenCos and DisCos have failed in the level of efficiency. Today, the DisCos are demanding for tariff increase which was not part of their agreement with government,” he said.