Power: Inappropriate tariffs have created N300bn funding gap – Discos

*Electricity distribution transformer.

*Electricity distribution transformer.

Oscarline Onwuemenyi

22 July 2016, Sweetcrude, Abuja – The 11 Electricity Distribution Companies (Discos) yesterday pushed their case for the implementation of the recent tariff hike even as they lamented that the funding gap in the power sector is now over N300billion due to inappropriate tariff structure in the past three years.

The Discos’ spokesman, Mr. Sunday Oduntan, who spoke under the umbrella Association of Nigerian Electricity Distributors (ANED), therefore, urged the Federal Government to create mechanisms to drive further investments into the sector.

Reacting to recent court judgment reversing the prevailing tariff last week, ANED said the Discos could not get loans from banks prior to the current tariff as the business was deemed not bankable.

“I enjoin us to look at the issues in the sector. Inappropriate tariff leads to shortfalls and that leads to funding gaps which has risen above N300billion.

“The MYTO 2015 corrects the funding gap but it is spread over 10 years and recovered gradually; if you look at the template, the tariff will go down after the first three years,” Oduntan explained.

According to him, a fair Multi Year Tariff Order (MYTO) was meant to cushion the impact but has not been cost reflective until the recent one signed in December last year.

Oduntan said the MYTO 2.1 was then suspended till February this year noting that the privatised companies bore the revenue gap of January when the MYTO was not enforced.

The ANED spokesman also urged the Federal Government to strengthen transmission services by doing a proper concession on managing and investing in the Transmission Company of Nigeria (TCN).

He said the Discos can distribute over 10,000megawatts (Mw) but are constrianed by inadequate transmission infrastructures citing instances of poor allocation to Kano DisCo.

“TCN requires about $7billion to construct a new 10,000Mw grid and another $1.2billion to fix the existing grid,” Oduntan said.

The Nigerian Electricity Regulatory Commission (NERC) last Friday said it has filed a stay of execution action on the 45 per cent average rise in electricity tariff while appealing against the court ruling.

Oduntan admitted that but for vandals’ actions on oil and gas infrastructures since March this year, industry operators expected a rise in generation to about 6,000Mw from the 5,072Mw attained in February, a day after the tariff was enforced.

He said significant improvement in power supply would have led to more revenue generation and speedier investments in rolling out meters, transformers and strengthening of networks since March this year.

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