Power sector shortfall exceeds N1.4tr due to tariff

THE non-review of the Multi-Year Tariff Order (MYTO) since February 1, 2016, has put the shortfall of the Nigerian Electricity Supply Industry (NESI) beyond the threshold N1.4 trillion.

The Executive Director of the Association of Nigeria Electricity Distributors (ANED), Sunday Oduntan, broke the news to reporters at the weekend in Abuja.

Explaining the damage caused by the freezing of the review on the industry, he said:  ”Our records show a figure in excess of N1.4 trillion shortfall of the value chain.”

He noted that the association would been bold to name non-performing DisCos if the companies had a cost reflective tariff.

Odutan, however, pointed out “that if you cannot collect 30 per cent (revenue), no Jupiter should expect you to remit 100 per cent.”

Giving conditions for an improved power supply in the industry, he said the sector must agree on the landing cost and the payment for it.

The executive eecretary, however, suggested that the “other option is to say the price is N100, we subsidize the poor who cannot pay N11, 000 for energy every month. You now subsidize it. If you introduce subsidy, the shortfall, the remaining figure has to be paid for.”

He listed Kenya; Tunisia; Uganda; South Africa; Ethiopia; Morocco; Egypt; Algeria and Burkina Faso are examples of countries that subsidize electricity for their poor consumers.

The third one is that “if the government is not buoyant enough to subsidize electricity, it should allow NERC to make a law that will create an instrument called, regulatory asset.”

Odutan noted that the creation of the asset will cover the shortfall in the industry because the DisCos can use it to borrow money from banks.

He said: “In every tariff computation there is an allowance for Capital Expenditure (CAPEX) which the operators’ expenditure must not exceed.

“The current tariff in the industry is a suppressed one as it gives all DisCos N45 billion and each DisCo N5.5 billion annual expenditure.”

The ANED representative said that the TCN, on the other hand, has a total of N50 billion annual expenditure approved for it, stressing that it was unfair for the TCN to complain about DisCos’ low investment.

With that heavy CAPEX, he said, the TCN cannot solve half of its problems.

He also disproved the acclaimed 7,000 Mega Watts (mw) energy generation capacity, stressing that that quantum of electricity does not enter customers’ homes in Nigeria.

Odutan added: “Today’s TCN has not transported to my members anything near 6,000 Mega Watts (Mw) one day, never in the history of Nigeria. TCN has not welled power up to 6,000 mw for one week from 1960 to 2019. Let somebody come out and state otherwise. We will asked them which day and when?”

He noted that the power firms have a higher revenue assurance in metered areas than those that under estimated billings.

He said that despite that the Nigerian Electricity Regulatory Commission (NERC) has saddled the Metered Asset Providers (MAP) with the responsibility of metering the customers, the DisCos, will continue to meet up with their previous obligation on metering.

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