Six DisCos declare force majeure over CBN policy on revenue collection

Six electricity distribution companies (DisCos) have filed for force majeure over a decision by the Central Bank of Nigeria (CBN) that all revenues should be ring-fenced by the banks, TheCable understands.

The firms are Benin DisCo, Port Harcourt DisCo, Kaduna DisCo, Kano DisCo, Enugu and Ibadan DisCos.

The DisCos were said to be unhappy with the decision and have written to the Bureau of Public Enterprises (BPE) that the agreements under which they bought majority stakes in the entities have been broken.

By declaring a dispute, the DisCos may return their stakes to the government and demand a refund of their payments when they took over 60 percent shares in the 2013 privatisation exercise.

They may also get compensations.

Last month, the CBN asked banks to take over the responsibility of collecting electricity bills from the DisCos, saying that would improve payment discipline in the industry.

Most of the DisCos are indebted to the banks with their loans classified as nonperforming.

The DisCos have been defaulting in paying the remittance threshold to the Nigeria Bulk Electricity Trading (NBET) for the invoice of energy received.

In May, The DisCos had approached a court to stop the federal government from conducting a forensic audit of their operations.

TheCable understands the recent approval for increase in tariff was to reduce government financial intervention in the sector.

The federal government has provided over a trillion naira facility for the payment assurance guarantee to resolve liquidity problems in the sector.