The Electricity Distribution Companies (Discos) under the umbrella of Association of Nigerian Electricity Distributors (ANED) complained that the N809 billion current shortfall of the operators does not encourage liquidity.
Mr Sunday Oduntan, Executive Director, ANED, Addressing newsmen on Thursday in Abuja, said that “the figure of the shortfall now is N809.8 billion in the whole industry.”
Oduntan described it “as the revenue that is accruable to the industry that is not there, stressing that the regulators in the sector are very inconsistent and perhaps inexperienced.
He recalled that the Nigerian Electricity Regulatory Commission (NERC) fixed its tariff late December 2015, but scheduled that the tariff should be effective on February 4 this year.
This delay, according to him, caused a loss of N12.8 billion across the power sector value chain.
He called on Nigerians to ask the government to state how to tackle the liquidity issue that the sector is now grappling with by giving assurance on gas supply and seeing to the possibility of selling to local consumers of gas in Naira.
He said: “When you sell to me for the dollar and I receive my money in Naira, it cannot work. You should look how best to factor these things such that at the end of the day, this thing will work. Not only selling in the dollar, they are not selling at the rate recognised by the tariff. N197 is the allowed Naira /dollar exchange in MYTO 2015. That means I am not allowed to sell my electricity based on the tariff computed on the basis of N197/$. So any increase in the dollar is nobody’s business but my burden to carry.”
The Executive Director said that there is a need for help for the sector for if the DisCos die, the transmission would die and generation would also die.
He added that “now the problem we have is that there is a lot of outstanding liabilities to be paid. We are owing NBET, we are owing market operators. We have been unable to pay… The shortfall does not encourage liquidity.”
According to him, the operators cannot continue to run a system that does not allow the re-engineering of their balance sheet.
He urged the government to make way for the recognition of shortfall in the electricity market.
Oduntan called on the NERC to do the needful by making provision for a tariff that reflects the current reality in the market.
According to him, since the handover of the entities to private sectors several regulatory setbacks have hindered the DisCos from meeting their targets in the performance agreements.
He called for an upward review of the N20 billion Capital Expenditure (CAPEX) limit that the Federal Government has allowed the companies, stressing that it has tied the hands of the investors and hindered them from expanding their businesses.
The implication of that cap in the CAPEX said Oduntun, “they (government) needs to cap it at some point as they want to avoid tariff shock. If it is very high tariff will be very high, if it is very low, the tariff will be very low. But if you are looking at the reality in the market, while we are taking decisions on these things. Under the MYTO, I am only allowed to spend a certain amount; N20 billion and that money is not enough.”
He also said: “We must do everything that will make the DisCos balance sheets bankable. If it is not bankable no banks will lend you money.”