A Review of the Nigerian Energy Industry

Power firms threaten pull-out on low tariff

08 October 2015, Lagos – Despite complaints of poor supply of electricity by consumers across the country through, power distribution companies have declared that the current tariff is not cost effective.

Power transmission station
Power transmission station

They have thus insisted that the nation’s power sector will collapse if electricity tariff remains low.

According to them, what electricity distribution firms currently collect as tariff is not enough and any attempt to reduce the rate will adversely affect the sector.

Chief executive officers of some Discos and the Association of the Nigerian Electricity Distributors said during separate interviews with our correspondent that the call for a reduction in tariff was an invitation to crisis.

Their reaction was also prompted by Tuesday’s directive of the House of Representatives mandating the Nigerian Electricity Regulatory Commission and the Discos to halt any plan to increase electricity tariff.

“Our people should realise that we need a cost reflective tariff or else this industry will die,” the Executive Director, ANED, Mr. Sunday Oduntan, said.

The chief executive of another distribution company in the South-West told our correspondent that some Discos had threatened to pull out of the privatisation process because of the huge losses.

“This is why some of us threatened to pull out of the process in the past. The tariff is too low and you want it to remain that way, never! If they insist, then, this sector will collapse and that will happen soon if care is not taken,” he said.

Many Nigerians have complained that power supply across the country has not improved appreciably since the industry was privatised about two years ago.

But Oduntan argued that the blame was not entirely that of the Discos, stressing that the power firms were already losing about 50 per cent of what they were generating as revenue due to electricity theft and nonpayment by consumers.

He said, “We are losing so much to energy theft and nonpayment by private individuals and the MDAs, particularly the military. This is affecting our revenue and the consequence is that it is negatively impacting our ability to invest much in the system.

“We believe that NERC should nurture and grow the industry, instead of killing the industry. We’ve done a lot of public consultations and instead of NERC to review our tariff that we submitted, they are asking us to go and do another consultation.

“People need to be educated on this issue of tariff. We are not talking about tariff increase, rather we are saying let us make it cost reflective. If you are producing bottles of Coke, you should know how much it costs you to produce one bottle in order to know how much to sell it. That is the issue and it is very important for Nigerians to know or else the industry will collapse.”

The Chief Executive Officer, Abuja Electricity Distribution Company, Mr. Neil Croucher, stated that the Discos were losing so much in revenue and called for a cost reflective tariff.

  • Punch
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