KPMG To FG: Deduct At Source, Pay MDAs Electricity Bills Directly To DISCOs
The Federal Government has been advised to consider a direct deduction of the electricity bills of Ministries, Departments and Agencies (MDAs) and paying them directly to the electricity Distribution Companies, DISCOs, to drive development in the country’s power sector.
Economic Confidential gathered that the DISCOs are being owed N98 billion by the MDAs and have not been able to collect the debts being owed them over time.
In its latest report titled: ‘The Twin Shocks and the Nigerian Energy & Natural Resources Industry-An Analysis of the Challenges, Consequences and Cure’, KPMG Nigeria said that the government may need to continue to provide financial support to businesses in this sector in their present circumstance.
But it stated: “However, this support must be administered in a manner that guarantees improvement in power infrastructure across the country.
“An obvious impact of the current situation on electricity distribution companies in Nigeria arises from the loss of revenues due to the reduction of demand from commercial and industrial customers. The government should consider deducting MDAs bills upfront and paying the same to the DISCOs directly.
“Government should ensure consistency and clarity of policies as this will encourage investments in the sector; criminalize energy theft and enforce penalties against offenders, as well as codify coherent fiscal policy that encourages the production of renewables, mini-grids and solar home systems to the market.”
On liquidity and collection challenges, the report noted that “DISCOs may consider the introduction of bulk payment incentives to encourage consumers to invest in significant pre-payment and ease the cash flow challenges. This may, however, not be possible in the short term until a cost-reflective tariff or price deregulation is achieved; and DISCOs should be allowed to engage any Meter Asset Provider available, anywhere in the country, without any restrictions (other than quality review and approval by NERC). This would encourage the mass deployment of meters to consumers.”
It added that the government should remain committed to the Siemens Agreement and the Nigerian Electrification Roadmap.