A report by the Nigerian Electricity Regulatory Commission (NERC) has stated that the 11 electricity distribution companies have a combined debt liability of N2.75trillion

According to the report, the liability is in the form of taxes, trade payables, debts and others.

The report however said the DisCos have a combined asset of N3.61tr.

The report is an order for the DisCos to demarcate their assets along states to ease the regulatory functions of the states when they enact the 2023 Electricity Act.

The order was signed by NERC’s Vice Chairman, Musiliu Oseni and Commissioner, Legal, Licensing & Compliance, Dafe Akpeneye, on July 25, but the details were figures for 2024.

Analysis of the report showed that Abuja Electricity Distribution Company (AEDC) has a liability of N357.57bn and an asset of N488.93bn, while Benin Electricity Distribution Company (BEDC) has N243.17bn liabilities and N487.86bn assets.

For Enugu Electricity Distribution Company (EEDC), its liability is N278.65bn and assets is N88.73bn. Eko Electricity Distribution Company (EKDC), also has N254.96bn liabilities but N303.44 assets while Ibadan Electricity Distribution Company (IBEDC) has N301.13bn liabilities and N543.23 assets.

Also, Ikeja Electricity Distribution Company (IKEDC) has N461.72bn liabilities and N363.66bn debt while Port Harcourt Electricity Distribution Company (PHEDC) has N222.72bn debt and N391.3bn asset with Kaduna Electricity Distribution Company (KAEDCO) having N259.27 liabilities and N318.78bn Assets and Kano Electricity Distribution Company (KEDCO) with N209.35bn liabilities and N148.38 assets

Jos Electricity Distribution Company (JED) has N90.64bn liabilities and N298.74 assets and Yola Electricity Distribution Company (YEDC) has N71.57bn liabilities and N182.83bn assets.

Further analysis showed AEDC debt included; N237.94bn in trade payables; N4.79bn in payroll liabilities and N46.40bn in tax liabilities.

For BEDC; N94.27bn is for trade payables, N21.40bn for interest shortfall, N171.1m for payroll liabilities and N80.08bn in tax liabilities. EEDC has N202bn as trade payables, N583.5m for payroll liabilities and N47bn as loans and advances.

EKDC has N135.09 as trade payables, N12.72bn as tax liabilities, N15.55 as deferred income and N241.9m as payroll liabilities.

IBEDC has N184bn as trade payables, N943m as payroll liabilities, N56.3bn as tax liabilities and N31.6 bn as contract liabilities.

Ikeja Electric has N194bn as trade payables, N5.4bn as deferred revenue, N81.16bn as tax liabilities, N1.20bn for payroll liabilities and N127.93bn as common liabilities.

For PHED, it has N92.41bn trade payables, N1.95bn payroll liabilities, N42.05bn as tax liabilities and N20.86bn as loan and advances.

Kaduna Electric has N189.37 as trade liabilities, N4.31bn as payroll liabilities, N860m in tax liabilities and N48.6bn in legacy commitment and loans.

KEDCO has N134.30bn as trade payables, N5.98 in payroll liabilities, N27.50bn in tax liabilities and N33.82bn in legacy loans and contracts. While JEDC has N32.89bn as trade payables, N1.98bn as payroll liabilities, N26.82bn as tax liabilities and N1.49bn in PAYE liabilities. And YEDC has N118m in tax liabilities, N18.4bn in common liabilities and N48.42bn in contingent liabilities.

Why DisCos were asked to demarcate assets

According to the order, the demarcation or delineation of DisCos’ assets and liabilities is to help guide regulators when the DisCos establish subsidiaries that will be successors when the states take over regulatory functions. “Consequent upon receiving notification from various states regarding the passage of their electricity laws and in compliance with section 230 of the EA, the Commission has issued requisite Orders transferring regulatory oversight to various state governments. The Transition Orders in this regard directed the relevant DisCos to undertake the following actions; Incorporate a subsidiary company (“SubCo”) under the Companies and Allied Matters Act for the assumption of responsibilities for intrastate supply and distribution of electricity in states that have commenced the transition process.

“Identify the actual geographic boundaries of the relevant state and carve out its network as a standalone network with the installation of boundary meters at all border points where the network crosses from one state to another. Create an Asset Register of all its power infrastructure located within the relevant state. Evaluate and apportion contractual obligations and liabilities attributable to the DisCos operations of its subsidiary within the relevant state and identify all the applicable trading points for energy offtake for the operations of the new SubCo in the relevant state.”

It said this will also help to confirm the number of employees that are required to provide service to the relevant state as a standalone public utility and transfer the identified assets for operations within the relevant state, contractual obligations, liabilities and employees to the new SubCo.

It added that the order came about after the commission held its first engagement with the State Electricity Regulatory Commissions/Bureaus on December 2, 2024 and determination of methodologies for delineating assets and liabilities between DisCos and SubCos was a key issue identified blocking the transition.

“To address these challenges and chart a clear pathway forward, the Commission organised a workshop with market participants and SERCs/SERBs representatives on the Development of a Framework for the Delineation of Assets and Liabilities. The Workshop yielded significant consensus on core principles to guide the delineation process for all DisCos and highlighted the need for a standardised delineation methodology.”

It added that the objective of the order is to confirm the allocation of core assets, non-core assets, regulatory asset value, legacy commitments and contractual obligations delineated between DisCos and its constituent SubCos in compliance with the provisions of section 230 (4)(b) of the Act.

DisCos frequent faceoff with tax authorities and staff

While the DisCos owe much of their debt to the electricity market, the quasi-audit of the DisCos highlights their struggling state despite trillions of subsidies the federal government has pumped into their operations and sector.

It would be recalled that tax authorities in states have on several occasions closed down the offices of DisCos for not paying their taxes.

Also, staff picketing headquarters of their utility companies is also rife with the recent being the sack of over 400 staff at the Kaduna Electric.

While the company said it has a bloated payroll, the staff union in turn said the company has failed to implement the new minimum wage, non-remittance of pension and cooperative deductions.

Similarly, staff of the Ibadan Electricity Distribution Company in February went on a strike leaving some parts of Ilorin, the Kwara State capital in total blackout.

But the Vice President of the National Union of Electricity Employees, Lagos/Ogun Zone, Abiodun Shobayo, told the media that the workers of IBEDC had no option but to embark on a strike action following months of failed negotiations with the management.

The Federal Inland Revenue Service (FIRS) had this month sealed the headquarters and offices of the Kano Electricity Distribution Company (KEDCO) over alleged tax liabilities amounting to billions of naira owed to the federal agency.

But in a retaliatory move, KEDCO reportedly disconnected the electricity supply to all FIRS offices across Kano State, further escalating tensions between the two institutions. (Daily Trust)