Discos Map Out N935bn Investment Plans
Power distribution companies are set to invest N935bn in their networks as calls for the recapitalisation of Discos heighten.
A total of N935bn is to be invested in power distribution networks across the country by electricity distributors following persistent calls that the firms be recapitalised.
Operators in other arms of the power business on several occasions had called for the recapitalisation of the Discos, as they noted that investment in distribution assets would enhance power supply in Nigeria.
Latest data obtained from the Nigerian Electricity Regulatory Commission on the Performance Improvement Plans of the Discos showed that the power firms had mapped out over N900bn to be invested in their networks between 2019 and 2024.
Documents submitted to the NERC by eight Discos showed that the firms would expand their networks with at least N935bn.
Of the 11 power distribution companies in Nigeria, the eight Discos that have indicated interest to invest the N935bn in their networks are Abuja, Ikeja, Benin, Kaduna, Kano, Enugu, Ibadan and Eko.
In their different Performance Improvement Plans submitted to the NERC, the Discos revealed how they planned to upgrade their distribution networks between 2019 and 2024.
They stated that their investments would be on facilities such as meters, transformers and power distribution lines.
The documents from NERC also showed that Abuja, Ikeja, Eko and Enugu Discos planned to invest N56bn, N105bn, N78.6bn and N118bn, respectively over the five-year period.
On their parts, Benin, Kano, Kaduna and Ibadan Discos will invest N287bn, N49.8bn, N112bn and N83bn, respectively during the same period, according to the documents.
The power firms stated that with such investments in their respective networks, their output would be enhanced in order to meet the demands of operators and electricity consumers across the country.
One major operator that had repeatedly called for increased investments in distribution networks is the Transmission Company of Nigeria.
The TCN had repeatedly called on the Federal Government to mandate the Discos to recapitalise by investing massively in their networks in order to effectively distribute power to consumers.
The Managing Director, TCN, Usman Mohammed, stated during an interview in Abuja that the Federal Ministry of Finance was looking into the request for the recapitalisation of the Discos.
“We have written our position to government on the issue of recapitalisation of the Discos and the Ministry of Finance has been asked to look into it. This is a fact. The good news is that the government at the highest level has agreed with us on the issue of recapitalisation,” he stated.
Mohammed insisted that the Discos had to recapitalise, either by getting more investors to invest in them or by sourcing for funds from multilateral donors.
He stated that the Discos had to expand their networks so that power users would benefit from the expansion work done on the country’s electricity grid by the TCN.
He said, “We have 177 interfaces with the Discos that are completely connected to our substations directly and this is leading to so many problems. Let me give you an example, you will see a situation where in a day, a 33kV line can trip more than 10 times. This is unsustainable.
“It is increasing our cost and making things very difficult. So, we have to ask for monetary investment on the side of the Discos so that they can be able to pick the load and rehabilitate their networks in order to ensure that the expansion we are doing at the TCN can lead to a clear improvement in the lives of Nigerians.
“This is because only less than 20 customers are connected directly to the grid; all other customers are connected through the distribution network.”
In August, it was reported that the Federal Ministry of Finance was asked to look into requests brought before it by stakeholders in the power sector, calling for the recapitalisation of electricity distribution companies.
Senior officials at the Abuja headquarters of the Federal Ministry of Power and the TCN stated that the finance ministry had to be involved in the matter because it had become vital for the Discos to inject more funds into the development of their respective networks.
Vice-President Yemi Osinbajo had earlier hinted that the Federal Government might repossess some of the privatised assets in the power sector, especially those belonging to the Discos.
Although officials at the power ministry, the TCN and NERC declined to speak on the plans to repossess the firms, they noted that a lot was being done to revamp the sector.
“The issue about recapitalisation of Discos has been tabled before the Federal Ministry of Finance and this again is another reason why the President approved N600bn for the sector,” an official at the FMP, who pleaded not to be named, stated.
Meanwhile, the power firms in their respective latest PIPs released by NERC stated that they would reduce their Average Technical Commercial and Collection losses, as well as increase metering of customers in their various franchise areas.
Abuja Electricity Distribution Company put its projected capital expenditure plan at N56bn over the next five years, adding that N50bn and N6bn would be devoted to technical and non-technical projects, respectively.
“This CAPEX (capital expenditure) plan is expected to fund loss performance targets that have been reviewed to take into consideration the affordability of tariffs. Three scenarios for setting the CAPEX limits were presented to determine realistic loss performance targets for the business,” it stated in its PIP.
The AEDC added, “The projects in the CAPEX plan are expected to significantly reduce the ATC&C losses in the business and boost the AEDC’s financial performance over the next five years. The business expects that a significant portion of the business proceeds will be reinvested into the business to drive further growth.”
Ibadan Disco said it would reduce its Aggregate Technical Commercial and Collection losses to 19 per cent and achieve 100 per cent metering of all its customers by 2024.
“Over the next five years, the IBEDC (Ibadan Electricity Distribution Company) plans to invest over N83bn in its network to expand capacity in line with our demand growth, replace assets and deploy state-of-the-art technology to improve the efficiency of our operations,” the Disco said.
Ibadan Disco also revealed in its PIP that it would raise 70 per cent (N60bn) of its capital expenditure requirement through loan from the Central Bank of Nigeria or the Bank of Industry.
It said the remaining 30 per cent would come through shareholders equity investment and funds generated from the business as return on capital investments component.
For Enugu Disco, the power firm stated that in the review period, it would reduce its ATC&C loss level to 30 per cent.
It explained in its PIP that for Enugu Disco to meet the expected loss reduction thresholds as set out, it would need a capital expenditure of N40bn and operational expenditure of N118bn.
The Disco said it intended to use the funds for network reinforcements and upgrades to increase the capacity of its network to meet the growing demand in its franchise area.
“It is our target to have availability of over 80 per cent on our network at the end of the period planned and to serve 25.8 per cent more customers as well as increase the reliability, so as to reintroduce some of the large industrial customers who have gone off-grid,” the Enugu Disco stated.
Benin Disco, as earlier stated, is investing N286.71bn in its network in the five-year period.
It said the fund would be used for additional network maintenance cost, increase in manpower cost, new information technology deployment and software expenses, growth in customers’ service charges, administrative and general expenses.
Ikeja Disco’s N105bn investment target will be for the expansion of the firm’s capacity in line with demand growth.
It said part of the fund would be used to replace assets and deploy state-of-the-art technology to improve the power firm’s efficiency.
Kaduna Disco targets to invest N117.8bn and plans to reduce its ATC&C loss level to 25 per cent, while on its part, Kano Disco is to invest N49.795bn.