Power market to lose about N1 trillion next month

The Association of Nigerian Electricity Distributors, ANED, on Tuesday projected that the electricity market revenue would record N809.8 billion shortfall by December.

Sunday Oduntan, the Executive Director, Research and Advocacy, ANED, disclosed this at a news conference by the association in Lagos.

Mr. Oduntan said the projected shortfall was based on the non-cost recovery nature of the tariff.

He said within the last three years that the sector had been privatised, the DISCOs had been operating at a loss.

He said that due to the delay in the implementation of Multi Year Tariff Order (MYTO ll) covering from December 2013 to February 2016, the DISCOs recorded a N12.8 billion shortfall.

The executive director said that government had not fulfilled its commitment to the agreement it signed with the investors during the privatisation of the sector in 2013.

According to him, government has promised the investors that there will be cost reflective tariffs from its inception as specified under the Performance Agreement.

“This never happened as customers were politically frozen and collection losses removed in 2015.

“Sculpting or under-recovery of cost will result in N164 billion revenue shortfall, for the period of 2016 through 2018 and delay in reflecting costs means a growing increase in deficits.

“Government promised an increased access to gas supply, but presently, there is little or no improvement in gas supply due to pipeline vandalism resulting in an average of 50 per cent reduction in generation.

“It also promised that full loses would be recognised in tariffs but presently real loses are higher than what is contained in tariffs due to non-payment of electricity bills by ministries, departments and agencies (MDAs).

“The generation level, which was expected from 2014 to 2016 to be between 5,000 megawatts and 7,000 megawatts, is now between 2,000 megawatts and 3,000 megawatts due to gas pipeline and transmission wheeling constraints,” he said.

Mr. Oduntan also refuted the submission by Aliko Dangote that investors who invested in power sector did so without an understanding of what they were venturing into.

“It will be difficult for anyone to suggest that people, seasoned and successful investors, who committed over N650 billion, did so without knowing what they were doing.

“It is fair to state that inefficiencies, corruption and limited information associated with the defunct PHCN are still a challenge to the sector operating under the present privatization arrangement,” he said.

He said in spite of the many challenges in the sector, DISCOs made progress in reducing technical and commercial losses, improved billing system and recruited thousands of skilled personnel.