By Obas Esiedesa, Abuja
Stakeholders and operators of the Nigerian Electricity Supply Industry, NESI, have urged the Federal Government to allow a cost-reflective tariff in the sector to improve liquidity across the chain.
While acknowledging that the sector has not delivered on the objectives of the privatization 10 years ago, they noted that poor liquidity was a major contributor to the market failure.
Speaking at across panel sessions on distribution and metering at the ongoing NESI Market Participants and Stakeholders Roundtable in Abuja yesterday, they held that the Federal Government has so far spent about N3.34 trillion in the past 10 years to subsidise the sector.
In his intervention, the immediate past Managing Director, Abuja Electricity Distribution Company PLC, Engr. Adeoye Fadeyibi pointed out that presently only Ikeja, Eko and Abuja Disclosure can continue as a going concern.
He noted that negative cash flow in the industry was affecting operations and the ability to improve power supply to customers.
In her intervention, the Country Director, Energy Market and Rates Consultant Limited, EMRC, Mrs Rahila Thomas said with less than 45 per cent of customers metered, customers were wary of constant increases in tariffs.
She observed that ATC &C (Aggregate Technical Commercial and Collection Losses) is one of the major variables driving up tariff cost in the market, stressing that there should be a balance between what the regulator proposes and what’s obtainable in the market.
“Every six months, the regulator is expected to review the tariff using economic indices to bring pricing to market level. Some of these variables are inflation, forex, and generation capacity.
“A review ought to have happened in July and the realities in inflation and forex mean tariff ought to have gone up but for political reasons this hasn’t been done. Government is now paying subsidies that have amounted to N3.34 trillion. Out of that the government has paid N2.8 trillion to support tariff.
“Unfortunately, all these monies are resting on the books of the DisCos which has impaired their ability to attract funding to improve their their network”.
In her remarks, the Chairman/CEO, Mojec Meters Limited, Chantelle Abdul said while it was the duty of the distribution companies to provide electricity meters to customers, financial challenges in the sector means they are unable to so.
“There are about 10 million customers in need of meters. Seven million customers without meters and three million with old meters that need to be replaced. The cost to finance that is about $1.5 billion.
“We are talking about opening up the market and whether the regulator should be regulating the price of meters. Majority of customers are poor and won’t be able to pay for meters”.
While admitting that it would be difficult to grow the sector while relying on government’s intervention or funding, she noted “We need to develop a bankable proposition, and that requires a cost reflective tariff and right pricing of meters”.
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