Expired licence: Panic over recovery of CBN’s N88.680bn loan to DISCOs

Members of the House of Representatives on Thursday were shocked over the repayment of the N88.680 billion loan granted by Central Bank of Nigeria (CBN) to Electricity Distribution Companies (DISCOs) whose operating licences expired in October, 2023.

According to the agreement signed with the apex bank and PMO, the DISCOs are to repay the loan within 120 months.

The revelation came at the resumed investigative hearing held at the instance of the House Committee on Public Accounts, chaired by Hon. Bamidele Salam (PDP-Osun) who frowned at the poor performance of the contractors who accessed the fund.

According to the document presented by the Committee, from the total of N86.680 billion loan released by Central Bank of Nigeria (CBN), Abuja Electricity Distribution Company got N7.530 billion, Benin Electricity Distribution Company got N13.293 billion, Eko Electricity Distribution Company got N12.912 billion, Enugu Electricity Distribution Company got N6.427 billion, Ikeja Electricity Distribution Company got N10.456 billion, Jos Electricity Distribution Company got N6.146 billion, Kaduna Electricity Distribution Company got N13.670 billion, Kano Electricity Distribution Company got N7.854 billion while Port Harcourt Electricity Distribution Company got N8.364 billion, respectively.

The lawmakers who spoke during the briefing however expressed concern that the DISCOs who have not been able to access the facility have started repayment of the interests on the loan.

According to the DISCOs Representatives, most of the xontractors engaged have not been able to access the facility approved by the apex bank for the execution of various power projects under their purview

Going by the report from CBN delegation who appeared during the investigative hearing, as at August 2023, out of 50 Contractors, 30 percent has so far been able to complete the process to access the fund.

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Trouble started when Hon. Salam inquired whether the operating licenses of the DISCOs will expire in 2028.

In his response, Managing Director/CEO of Jos Electricity Distribution Company, Engineer Abdul Bello Mohammed, who confirmed to the lawmakers that the operating licences of all the DISCOs expired last month, however noted that two years were declared as non-performing years.

He said: “The EPS 2005 provided for a tenure of 10 years licence for the Distribution Companies. But however, there’s also a provision for renewal of this licence for another 10 years and then extension by five years.”

When asked when the first 10 years elapsed, Engineer Mohammed said: “It should be in October this year.”

In his response, Engineer Mohammed said: “yes, by implication. Going by the provisions of the Act. But there are two years that were declared non-performing years and I think they’ll be added.”

Yet unsatisfied with his explanation, Hon. Salam asked whether the licence will extend to 2025 and automatic, he said: “it has to be applied for. The Act clearly provides that the DISCOs should write.

“The Act is very clear about it, it says that the DISCOs will apply for the renewal of this licence and then the Commission (NERC) can also extend it.”

But when asked again whether the DISCOs have applied for the renewal, Engineer Mohammed said: “it (existing licence) has not expired yet because of the two years non-performing…”

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In another breath, he said: “it is the Commission that will actually clarify that.”

In his remarks, Hon. Salam said: “Why I asked that question was, you have a bill of 120 months loan repayment bill and I’m afraid that if the licence expires and there’s no renewal, where do we get our money back?”

While lamenting that some of the DISCOs are not stable financially, Hon. Salam frowned at the inability of the DISCOs to access the intervention fund worked out for them through the apex bank to boost their capacity.

While responding to hullabaloo over the involvement of the DISCOs repayment, he said: “We were made to sign contract awards as DISCOs and the PMO also issued the final contract award.

“The projects are meant to confront the problems of the DISCOs. We agreed with TCN that this money will be channeled through the distribution companies with the purpose of addressing these bottlenecks. And that is the structure that has been put in place through the PMO and everybody is involved.”

However at another breath, Engineer Mohammed argued that: “the payments are not DISCOs projects, they are specifically TCN projects but DISCOs are used through all the lending structures to shoulder that responsibility.”

After the heated session, the Committee resolved to summon all the stakeholders involved in the transactions including, CBN, Nigerian Electricity Regulatory Commission (NERC), Deposit Money Banks, DISCOs, Transmission Company of Nigeria (TCN), Contractors, among others.

While ruling, Hon. Salam adjourned the investigative hearing to 13th December, 2023

Expired licence: Panic over recovery of CBN’s N88.680bn loan to DISCOs