DISCOs: Electricity tariff MAY go up in 2017

The Association of Nigerian Electricity Distributor (ANED) says electricity tariff may go up again in 2017, but this time, “modestly”.

Speaking at a press conference in Lagos, John Donnachie, managing director and chief executive officer of Ibadan Electricity Distribution Company, said the Discos inherited a backlog of underinvestment, which must be surmounted.

“In order to address shortfall, we need to borrow, and there are discussions with CBN, the ministry of power and commercial banks, to look at a way to cover the liquidity challenge in the short term,” he said.

“We are confident that the issue (of shortfall) will be resolved, and over the ten years, it will all be made good. There are challenges here and now, the first two years. Yes, there was an increase, you see all sort of numbers being put out, but its only about 41 percent.

“It still was not sufficient to cover all the cost of running the Discos. So you might find a first increase on the first of February, there might need to be a modest increase next year. But thereafter, things should stabilise.

“The long term outlook is a very positive one for Nigeria, it’s got the resources of coal, gas, oil.”

The Discos also complained of lack of forex exchange needed to import equipment needed for optimum delivery, to the tune of N55 billion, while adding that ministries, department and agencies of government owe N93 billion in electricity bills.

DISCOs HAVE METERED 3.28 MILLION NIGERIANS

Sunday Oduntan, ANED executive director, who also spoke on behalf of the distribution companies (Discos), said the last government led by Goodluck Jonathan reneged on its pact with the Discos, resulting to the delay the emergence of cost reflective tariff.

Oduntan revealed that Discos have been able to metre over 3,283,402 million households since it came on board, leaving a deficit of 2.8 million.

Speaking to the inability of Nigerians to get much needed power, Oduntan said the Discos do not generate the power, but only aid in its distribution.

He added that ANED was not getting enough revenue to perform as effectively as they would love to, emphasizing that only 25 percent of monies paid in bills are for Discos.

“You need to understand that only 25 percent of collection belong to the Discos, so when customers don’t pay, they are not only denying Discos the much needed revenue, they are denying the gas supplier, they are denying the generating company and the transmission company,” he said.

“We need to all play our roles, so that the sector will not collapse. Another issue that borders us is the theft of electricity. All over Nigeria, customers bypass their metres. This industry cannot survive with this level of theft.

JONATHAN’S GOVT WASN’T BOLD ENOUGH TO RAISE TARIFF

He said the first cost reflective tariff was implemented on February 1, 2016, referring to other tariff change as mere “trial and error”.

“To quickly correct the impression that we have increased tariff several times between 2013 and now. Without passing the buck, let me set the record straight.

“The truth of the matter is that, the first time we would have a semblance of an appropriate pricing of the product, because electricity is a product, was February 1, 2016.

“Anything we have had before then was just a matter of trial by error, because when we wanted to buy the asset, the federal government promised us that we would have the appropriate price; they called it cost effective tariff from November 1, 2013.

“It was the federal government of that time who reneged on their promise, who made it impossible, who could not take that bold decision. That was why we didn’t have the appropriate pricing.

Oduntan urged Nigerians to bear with the Discos as they try to get money to give the necessary service.

He said the tariff is a 10-year tariff, which goes up in the first two years, would begin to come down in the third year.

WAY FORWARD

Oduntan said for the sector to function to taste, Nigeria would have to generate more power, while government will honour the terms of the privatisation agreement, and policy making.

“There’s a need for consistency in regulation, so the sector can be more commercially viable. Investors want to be sure that Nigeria has changed, that the country is fighting corruption to the ground,” he said.

“If they still feel we are still the same people we were in the past, very corrupt, nobody will come to invest in the power sector.

He added that “government needs to allow Discos access to foreign exchange”.

The Discos apologised to paying Nigerians for epileptic power supply,  saying it cannot give what it does not have.