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The Nigerian Electricity Regulatory Commission (NERC) will not effect the anticipated increase in electricity tariffs until there is a significant step-up of power generation in the country, BusinessDay has authoritatively gathered.
This poses a challenge to the distribution companies (Discos) which are struggling to find their feet in a newly deregulated sector and are agitating for a tariff increase to enable them to fulfil their loan repayment obligations.
NERC says it cannot defend a tariff increase at the current low generation rate and with the public outcry over excessive power outages nationwide.
According the commission, the Multi Year Tariff Order (MYTO) that governs the financials of the Nigerian electricity market benchmarked the tariff on the assumption that the grid would generate at least 7,000 megawatts (MW) by December 2014.
Sam Amadi, chairman and chief executive officer, NERC, says the grid currently produces, on the average, only about 3,500MW daily. According to him, “We had hoped on extra power coming from the National Integrated Power Plants (NIPPs), but many of these plants do not have enough gas to produce to capacity.”
BusinessDay investigations further revealed that the distribution companies are pushing for increase in tariff because they are not receiving sufficient generation which would help them to meet their financial commitments to the banks.
The regulatory authority was said to have agreed that increase in tariff was inevitable but was not feasible in the immediate, telling the investors that there was need to focus on generating more energy now and that thereafter, it would make sense to start thinking about tariff increment. NERC also said the priority for now was to address the gas constraints to power generation and not a tariff increase.
But Bisi Sanda of Ernst & Young said the shortage of gas supply to the generating companies was as a result of lack of foresight by the government, adding that government had long been dilly-dallying on the issue of gas production. He blamed the government for lack of the will power to formulate policies to ensure effective use of gas until recently.
“Electricity is generated through the consumption of fossil fuels, coal or gas, but gas is more environment-friendly and commercially-viable than coal which is all over the place,” he said, wondering why it had taken the government so many years to come up with a gas policy.
The new investors are anxious to pay back the loans they obtained to purchase the power assets and this is distracting them from properly attending to facility maintenance, BusinessDay gathered. This leaves a lot of customers agonising now about local faults which the Discos are not attending to, in addition to excessive power outages.
A staff of one of this Discos who spoke to BusinessDay on the condition of anonymity said the new owners were not ready to spend money on facility repairs now.
“They asked us not spend our money at business units level to buy things for repairs within the network, but they are not giving us money either to buy. It could take as much as three weeks to replace an electric pole,” he said, adding that it would be worse for any community that loses its transformer at the moment because they would stay in darkness for a long time.
“These new people are just not ready to spend money. All they are interested in is to collect money. Many places now experience blackouts because there is no attempt at replacing obsolete equipment within their networks. Faults are everywhere within the networks but they are not promptly attended to because there are no spare parts or accessories for replacement,” he further said.
By: Olusola Bello
