Nigeria's minister of power, works and housing, Babatunde Fashola, has said that the Nigerian Electricity Regulatory Commission (NERC) wants the accounts of and revenues generated by the country's 11 electricity distribution companies to be centralised and escrowed to protect the power sector from collapsing.

Fashola said the companies had failed to meet their letter of credit (L/C) obligations, which the minister conceded is a point of view the electricity suppliers disagree with. They say they are not in breach of their L/C obligations.

Payment guarantees

The minister maintains the distribution companies have routinely failed to honour agreements reached with Nigerian Bulk Electricity Trading (NBET) to provide L/Cs to guarantee future payments for energy sold to them by NBET.

The L/Cs should be available to draw on in the event of a distribution company failing to pay NBET.

Frequent defaults

The minister has not explained how the companies have managed to avoid putting up L/Cs, but according to Fashola, the companies have "frequently defaulted" in several of their financial agreements.

The minister has also alleged that the power suppliers have failed to open up their financial statements for proper review by the electricity regulator, which he says is a requirement under Nigeria's corporate governance legislation.

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