A Review of the Nigerian Energy Industry

Govt gives power firms tariff conditions

Prof Chinedu Nebo
Prof Chinedu Nebo, Minister of Power

02 March 2014, Abuja – The proposal for an upward review of electricity tariff by power investors will only be granted after they have satisfactorily met certain conditions, including the provision of sufficient pre-paid meters for consumers, the Federal Government has said.

The National Electricity Regulatory Commission stated in a document obtained on Friday that the electricity distribution companies must give consumers satisfactory services before government would consider their request.

It also stated that the firms should take seriously issues that had to do with consumer forum offices.

The paucity of funds and the firms’ inability to efficiently collect revenue from electricity consumers had prompted the call for an upward review in tariff.

NERC, in the document made available to SUNDAY PUNCH by its Head, Public Affairs, Dr. Usman Arabi, said although some distribution companies had reported that they were losing money due to electricity theft, the government would not review the tariff until the listed conditions were met.

Last week, SUNDAY PUNCH exclusively reported that the distribution firms were not financially strong, a situation which was making it difficult for them to revamp the already dilapidated infrastructure in some of the companies which they acquired.

It said, “Consumer issues including rebranding, metering, forum office, etc, need to be taken seriously by the Discos as a prerequisite for the consideration of any tariff review request.

“A number of the Discos reported a very high incidence of electricity theft by way of bypassed meters. This has been curtailed to a considerable extent through the introduction of the Credited Advance Payment for Metering Implementation scheme, while efforts are still ongoing for other metering programmes. The Discos are encouraged to conduct a good public enlightenment and consistent customer load profiling as a means of minimising electricity theft.”

According to the commission, the feedback from the electricity Market Operator shows that many of the Discos are still facing financial constraints as they have failed to make remittances due the Federal Government.

It said, “The MO complained of a low level of remittance from the Discos. This means that the MO does not receive the expected funds at specific times and this results in late payment to the Gencos (power generating companies). With regard to capacity allocation, the MO expects NERC to review it downwards due to some Discos’ inability to pay.”

In a bid to boost power supply to the Discos to drive revenue generation upward, the commission said it had reviewed issues of gas supply constraint.

It said meetings were held between NERC and the thermal generators, the Presidential Task Force on Power and Gas Companies to discuss issues of gas-to-power.

It said an initial meeting was held with the Gencos to identify where, in the short term, stranded capacity for natural gas could be maximised.

It noted that another meeting was held with the Group Executive Director, Gas and Power, at the Nigerian National Petroleum Corporation on the issues bearing in mind that NERC had no power to regulate the gas industry.

“Points noted include the need to draw up a schedule for repairing damaged pipelines while the NNPC pledged to improve security of pipelines,” NERC stated.

The commission urged all parties in the sector to look at the underlying considerations of the Multi Year Tariff Order in terms of available capacity.

It said, “Other related issued raised include gas shortfall with the attendant effect this will have on MYTO assumptions and the need for optimal national co-ordination of water use for the hydro plants.”

The Chairman, NERC, Dr. Sam Amadi, had noted that discussions were being held with the Minister of Power, Prof. Chinedu Nebo, on the gas supply issue and the allocation of risk in the event of force majeure.

“To fully discuss gas concerns, a subsequent meeting of CEOs and other industry stakeholders may be dedicated to the purpose,” he added.


– The Punch

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