Banks to ensure Discos pay NBET, TCN debts – CBN

The Central Bank of Nigeria (CBN) has ordered deposit money banks to ensure that electricity distribution companies (Discos) pay for the consumed power they were provided with.

Consequently, banks providing guarantees to Nigeria Bulk Electricity Trading Plc (NBET) and the Transmission Company of Nigeria (TCN), on behalf of Discos, will be fully responsible for collections by Discos and the remittances of same to both NBET and TCN.

The move is part of the campaign to improve payment discipline in the Nigerian Electricity Supply Industry.

According to a statement by Yunusa Abdullahi, Special Adviser on Media and Communications to the Minister of Finance, Budget and National Planning on Tuesday, the decision was made to address the enormous debt overhang among Discos.

Abdullahi also said President Muhammadu Buhari had endorsed a one-year deferment of the 35 per cent Import Adjustment Tax to ease the importation of electricity meters.

An Import Adjustment Tax is a levy typically imposed on Fully Built Unit electricity meters, under the 2019 fiscal policy measures for the implementation of the Economic Community of West African States common external tariff 2017-2022.

The approval followed the request by the Minister of Finance, Budget and National Planning, Zainab Ahmed, to support the Nigerian Electricity Regulatory Commission in issuing three million electricity meters via the Meter Asset Provider (MAP) framework.

“The 35 per cent levy was imposed on the recommendation of the Federal Ministry of Industry, Trade and Investment, to encourage local production, as well as protect investments in the local assembly of electricity meters,” Ahmed was quoted as saying.

Adullahi stated that a major component of the MAP regulation was a gradual increase of the patronage of local manufacturers of electricity meters with an initial minimum local content of 30 per cent with the potential of significant job creation in areas like meter assembly, installation and maintenance.

“A total of six million consumers have to date been captured to have indicated interest for electricity meters.

“Some of the approved investors under the scheme have also, prior to the implementation of the appropriate HS Code 9028.30.00.00 for the importation of electricity meters, proceeded to import a significant stock of meters for roll out.

‘’This is in line with the timelines issued by NERC and the service level agreement agreed with the Electricity Distribution Companies, DISCOs.

“In view of the local content for the sourcing of electricity meters, it is approved that 50 per cent of the current demand for electricity meters be considered for importation at the ECOWAS CET import duty rate of 10 per cent zero levy,” he said.