Victor EzejaThe House of Representatives Public Accounts Committee has launched a comprehensive investigation into the N2.6 trillion debt owed by Nigeria’s electricity distribution companies (Discos) to the Federal Government.
The 11 electricity distribution companies have been summoned before the House Public Accounts Committee for allegedly failing to pay debt owed to the government through the Nigerian Bulk Electricity Trading Company (NBET).
Join our WhatsApp ChannelThe resolution was made on Wednesday during an investigative hearing presided over by Mr. Bamidele Salam, the Committee Chairman.
This probe follows the review of the 2021 Auditor-General’s report, which revealed massive financial irregularities within Nigeria’s power sector.
The 11 DisCos have been invited to explain their persistent failure to meet financial obligations to the NBET.
Managing Director of the NBET, Johnson Akinnawo, who appeared before the House Committee on Wednesday, gave a breakdown of the liabilities.
The debt profile of the 11 electricity DisCos reveals significant variations in their financial obligations to the federation account
According to documents submitted by NBET to the House Committee, the total debt of N2.6 trillion, which accrued as of 30 September 2020, represents unpaid remittances that should have been paid into the federation account.
The breakdown shows that Abuja Electricity Distribution Company owed N330.4 billion, which is the highest, followed by Ibadan Electricity Distribution Company (N325.7 billion), the Ikeja Electricity Distribution Company (N310 billion), Kaduna Electricity Distribution Company (N277.7 billion), Enugu Electricity Distribution Company (N258.3 billion), and the Port Harcourt Electricity Distribution Company (N239.7 billion).
Others are Eko Electricity Distribution Company (N231 billion), Benin Electricity Distribution Company (N233.2 billion), Kano Electricity Distribution Company (N211.7 billion), Yola Electricity Distribution Company (N107.4 billion) and Jos Electricity Distribution Company ( N161.7 billion).
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The relatively lower debt of Yola Disco (N107.4 billion) can be attributed to its smaller coverage area and customer base.
This massive debt represents a significant financial burden on Nigeria’s electricity infrastructure and has profound implications for the country’s economic development. The power sector’s financial viability has been a persistent challenge since the privatization of the sector, and this debt accumulation highlights the structural problems plaguing Nigeria’s electricity market. The House of Representatives’ intervention signals growing governmental concern over the sustainability of the power sector and its impact on national development.
The 2021 Auditor-General’s report that prompted the legislative probe revealed multiple financial irregularities beyond the Disco debts, painting a picture of systemic financial management challenges in Nigeria’s electricity market.
According to the document, the irregularities include: N100 billion paid by NBET to generation companies (GenCos) for electricity not delivered to the national grid; N549 million shortfall in NBET’s 1 per cent income from institutional charges; N30 billion in uncollected debt by NBET from market operators; N26 billion owed to Nigeria by two foreign firms for power exported to Togo, Benin, and Niger; N166 billion in under-remittance by Discos, below the Nigerian Electricity Regulatory Commission’s (NERC) minimum threshold; and N2.7 billion in unpaid invoices by the 11 Discos.
These findings, according to analysts, suggest widespread financial governance challenges across the electricity value chain, from generation to distribution.
The payment for electricity not delivered to the grid points to possible contractual inefficiencies, while the uncollected debts from international customers highlight challenges in cross-border electricity trading arrangements.
The motion to summon the Discos was moved by Hon. Yahya Kusada and seconded by Hon. Billy Osawaru, who emphasized that “with the magnitude of liabilities before us, it is imperative that these companies appear before the Committee to clarify their positions and outline plans for repayment.”
Quest for Expanded Investigation
The Committee has resolved to extend its investigation beyond the Discos to include other market operators and participants in the power sector. This comprehensive approach recognizes that the financial challenges in the electricity market are systemic and require examination of all stakeholders
Victor Ezeja is a passionate journalist with seven years of experience writing on economy, politics and energy. He holds a Master's degree in Mass Communication.
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