By Dele Ogbodo
The Association of Nigerian Electricity Distributors (ANED) on Tuesday said the current myriad of challenges facing the electricity sector
can only be resolved if federal government settles the true cost of what DisCos distribute and the true cost of the product often referred to as tariff gap. ANED told SHARPEDGENEWS Online that the tariff gap is N1.3 trillion.
Briefing the media on the state of power in the country, ANED led by its Spokesperson, Barr. Sunday Oduntan, said in Abuja, that it is this un-addressed fundamental problem of tariff gap that the DisCos are shouldering that is inhibiting the sector’s growth.
In a mood ostensibly fueled by patriotism, the DisCos averred that they have invested N427 billion into the sector without commensurate return in the last few years, adding: “a condition which was the basis of the investment after the five-year performance period.’
The Spokesperson said: “Even worse is that, with current conditions, it is unlikely that they will recover their investment, which is already in the negative, anytime in the near term. However, this lack of sight of a return of investment or on investment, certainly, does not encourage the injection of borrowed capital or equity, that is key to driving the turnaround of NESI or providing the efficiency and signaling that will result in improved generation and the resultant tariff reduction.”
Oduntan, said: “It is this gap that has solely contributed to the excess of N1.3 trillion that the DisCos are carrying on their financial books, an impediment to both the sustainability of the electricity market and the ability of the investors to meet the obligations of their performance agreement with the government, which should result in the improved metering, customer service, increased customer connections that electricity consumers demand and deserve.
According to Oduntan, government through the ministry responsible for power has not positioned the DisCos to succeed by addressing the tariff gap, explaining that this action of government is unfair and not reflective of the facts on the ground.
The association said it is not advocating a tariff increase on electricity consumers, as being misconstrued in some quarters, adding: “some of whom are already dealing with affordability issues. We are stating that the mandated tariff gap is a responsibility of the government and should be addressed by the government, so that Nigerians can receive the improved electricity delivery service that they deserve.”
While acknowledging the debt owed to the Nigerian Bulk Electricity Trader (NBET) by the DisCos, they also point at the unresolved tariff gap as being solely responsible for this debt, stressing that the debt status as it is will continue to grow, unless it is urgently addressed.
ANED frowns at the deployment of the inclusive funding of $350 million from the World Bank, to the Rural Electricity Agency (REA) to implement projects. That, the association averred is misplaced and do not make sense.
Oduntan said: “Examples of such projects include providing solar-powered in Effurun, Warri, an area replete with cheap gas; and gas-powered electricity in Ife, an area without access to gas but replete with lots of solar energy.
“Unfortunately, these projects or contracts tend to be comparatively procured at exorbitant prices, raising the questions whether taxpayers are getting value for their money or whether REA has not strayed completely away from its mandate of providing electricity to the 65 percent of rural dwelling Nigerians that have no electricity.
“Additionally, N78 billion has been put in the budget for “distribution” projects to be implemented by the Transmission Company of Nigeria (TCN). Why would TCN be implementing contracts for a largely privatized sub-sector, utilizing taxpayers’ funds? Our perspective on this issue is that there seems to be more of an interest from the ministry in awarding contracts than making the DisCos whole, which is a resolution that holds greater value for the wider population of Nigeria than the, seemingly, misguided contracts being awarded by the Ministry through its agencies of TCN and REA. It is almost enough to conclude that the DisCos are being deliberately held down for the award of these over-priced contracts.”