The Association of Nigerian Electricity Distributors (ANED), has dismissed the reports of moves to increase electricity tariff by 200 percent.
Azu Obiaya, the Chief Executive Officer of ANED, told Vanguard that with the present economic recession it will be unreasonable for the Distribution Companies (DISCOs) to increase electricity tariff.
This came as the association lamented a continued rise in liquidity deficit which may hit N809.8billion by end of this year, against N383.2 billion recorded in December 2015.
Obiaya, addressing what it termed false speculation on tariff hike, said, “I did not say we are going to increase the tariff 200 percent but what I said was because of the changes that have occurred, recently inflation has gone up, the Naira has been devalued for almost three times, the gas pipeline vandalization have resulted in drop of power generation. And we have not written such letter on tariff increase to Nigerian Electricity Regulatory Commission (NERC).
He further said, “There has to be recognition of something we all have to partner on. We don’t believe any reasonable person at this time will ask the consumers to pay more in terms of electricity consumption given the recession.
“So since there are only two parties who meet their obligations to electricity supplied, government or the consumers, we believe the government needs to step in now and vigorously play a role.
“The minor review typically occurs in June by every six months, so the process of the minor review has been ongoing but it is moving into its completion. The other issues of shortfalls of cash reflective tariff have been out there.
He added, “There is the need for the increased cost of electricity production, and there is the need for the increased cost to be addressed. It will reduce the tariff cost reflective, the entire value chain from revenue shortfalls now. And the cost of power now is at N1.00 per kilowatt per hour, but the industry is collecting only 60 kobo per kilowatt hour, there is a difference of 40 kobo that needs to be addressed.”
He urged the government to step in with sustainable measures to rescue Discos out of the current challenges they find themselves in providing electricity services to consumers in the country.
According to him ANED do not believe that the tariff has been cost reflective, because the current MYTO 2015 assumption was N194 to the Dollar, which currently at Central Bank of Nigeria, CBN’s rate has been N364 to the Dollar, and inflation was nine per cent, current at 17.9 per cent.
While the generation assumption under this new tariff supposed to be over 5000 megawatts, but currently averaging 3500 to 4000 megawatts. In addition, he said ANED have accumulated N53 billion of MDA’s debt, which has remained unpaid for by the government, and as a result of all of these issues the association owes the GENCOs.
Also speaking to Vanguard in a telephone interview, Executive Director, Research and Advocacy of the Association, Mr Sunday Oduntan, explained that the liquidity deficit in the power sector is increasing speedily, making it difficult for them to meet its metering targets and other regulatory obligation.
In his words, “The challenges hindering development in the power sector remains liquidity which is way higher than envisaged.
“You cannot talk about metering without talking about the liquidity issues we have in the sector currently. According to him the industry has MDA debts of over N100 billion while total liquidity deficit in the power sector which was N383.2 billion as at the end of December 2015, will be will be up to N809.8billion by end of this year if this situation continues.
“All these challenges are impediment to procuring meters for customers in the country.”
On metering, he said that the distribution companies had at the moment metered over 3.3million customers and is left with about 2.7 million customers that are yet to be metered.
“We have metered 3.3million customers and those not metered are about 2.7 million. The number is increasing anyway. What we are working on is aggressive metering system.”