How lack of tariff review costs power sector N1.4tr, by DisCos
Decry attacks on staff, vandalism of infrastructure
Federal Government’s inability to periodically review power sector’s Multi Year Tariff Order (MYTO) has resulted to a loss of over N1.4 trillion.
Executive Secretary, Association of Nigeria Electricity Distributors (ANED), which comprises 10 power distribution companies (DisCos), Sunday Oduntan, disclosed this during a media briefing in Abuja at the weekend.
He said while the MYTO, which came into effect in February 2016 gave room for periodic tariff review in the Nigerian Electricity Supply Industry (NESI), the Nigerian Electricity Regulatory Commission (NERC) charged with the responsibility, failed to comply with the order.
Oduntan, who decried vandalism of power infrastructure, especially injection substation at the Ibadan DisCo in Ilesa, Osun State, stated that rising attacks on electricity workers and journalists by protesters was unacceptable.
He also urged President Muhammadu Buhari to urgently intervene and address the challenges in the nation’s power sector.
Noting that lack of cost reflective tariff was one of the key challenges affecting the sector’s performance, he said: “Our records show a shortfall in excess of N1.4 trillion in the value chain.”
Oduntan charged the Federal Government to work out the landing cost of unit of electricity in the country and decide if Nigerians should bear the cost or government should subsidise it for Nigerians.
“While the current tariff is unrealistic, no one is paying for the shortfall resulting from the pegged MYTO. If government lacks the resources to pay the tariff and wants Nigerians to bear the cost, then it should enact a law that would provide for regulatory assets,” he added.
He further argued that such development would enable DisCos to borrow money from commercial banks.
On infrastructure gap in power distribution, Oduntan noted that the current capital expenditure available to DisCos was critically low compared to infrastructure deficits.
He pointed out that each DisCo was only permitted to spend N5.5 billion on capital expenditure every year, while agencies like the Transmission Company of Nigeria (TCN) spend N50 billion.
Condemning the situation, Oduntan noted that the allowable capital would not solve half of the challenges in the distribution network.
On metering, he insisted that the introduction of Metered Asset Providers (MAP) has taken over the responsibility from utility providers.
On vandalism of power infrastructure and constant assault on DisCos’ staff members, Oduntan insisted that Nigerians should find the right way of engagement instead of resorting to violence.
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