– GenCos threaten match over delay
– DisCos, govt, discuss poor services, supply expense
– Senate urges Buhari to bear expense of delayed walking
– Operators reject lobbying NASS, putting sector in financial obligation
Nigeria’s electrical power supply industry deals with yet another regulatory summersault, as the National Assembly, on Monday, toppled plans to increase expense of electrical power supply by as much as 50 per cent.
This came as senators the other day pledged to oblige the executive arm of government to bear the impact of prepared hike in electrical energy tariff, if ultimately accepted next year.
In the exact same vein, the country’s power generation business (GenCos) the other day in Abuja said they would think about fulfilling the Federal government at the court of Arbitration if prepared electricity tariff increase is not executed today (July 1).
Reacting to intervention by the National Assembly, which delayed the tariff increase, Executive Secretary of the Association of Power Generation Business (APGC), Joy Ogaji, stated federal government should increase the tariff today, (Wednesday, July 1, 2020) or GenCos would either collect their impressive charges or head to court.
Ogaji likewise said that the operators would declare a force majeure and down tools.
” We are ill and worn out of this back-and-forth.
Ogaji included that the GenCos were obliged to generate electrical energy for Nigeria, and in turn get 100 percent payment of their month-to-month market billing as was concurred in the (PPA).
She revealed that, while GenCos engaged in an enormous capacity healing, they have actually been constantly paid less than 100 per cent of their billing monthly.
” 6 years after the privatisation, GenCos’ Available Generation Capability (AGC) has been gone beyond. The implication of this is that GenCos have kept to their market arrangement with the Bureau of Public Enterprises (BPE) and the marketplace.”
On the contrary, representatives of electricity circulation companies (DisCos) had preserved that they would support suspension of the prepared walking only if federal government would bear the distinctions in current tariff and what was considered as suitable.
Speaking on the concern prior to the Senate Press Corps yesterday, Chairman Senate Committee on power, Gabriel Suswam said: “Nigerians were greatly burdened because of COVID-19 The economy has contracted by 3.2 percent; that’s a lot. It makes it hard for you and me to participate in to some of our social issues.”
He revealed the hope that the executive would concur, although it would come at a cost.
President of the Senate, Ahmad Lawan, Speaker of your house of Representatives, Rt. Hon. Femi Gbajabiamila and other principal officers of the two Chambers had satisfied at the National Assembly with presidents of electricity regulatory body and DISCOs throughout the country.
The National Assembly leaders were emphatic that the timing of the prepared walking was wrong, despite the fact that they had no objection to cost-reflective tariffs to draw in the much-needed investments.
In the course of the conference, the DISCOs also admitted that they were not well prepared for the prepared walking in tariffs; although they wanted the boost.
The conference for that reason, agreed to delay the prepared walking up until first quarter of next year, while the management of the National Assembly guaranteed to meet with President Muhammadu Buhari on the matter.
Lawan stated: “The agreement was that there was not going to be any increase in tariffs on July 1. While we remain in agreement here that there is no question on reason for boost, the time is just wrong and proper steps require to be put in place.”
DisCos and management of NASS are being accused of working to postpone the remove of the tariff. Owners of the companies supposedly lobbied lawmakers to delay the plan.
Though NASS only postponed the tariff increase to first quarter of 2021, offering simply a momentary relief for customers, a great deal of electrical power customers and civil society groups have actually revealed issues, specifically provided the sorry state of the industry and its impacts on economic development and standard of living.
The industry has actually experienced lots of regulatory flops, which may continue to weaken the objective of bridging the huge electrical energy space despite privatisation.
The present advancement is coming hardly three months after the nation shelved an earlier plan to implement tariff review.
Being the 2nd failed effort in the last 3 months, stakeholders are beginning to reveal deep issue, especially as the sector continues to speak from both sides of the month regardless of big liquidity and investment lethargy.
They are also stressed over a supposed service-reflective tariff, which might oust the masses and prioritize well-to-do Nigerians in arrangement of electrical energy, though as much as 93 million Nigerians (about 55 percent) still do not have access to electricity.
With over 4 different groups or committees trying to regulate the sector, the stakeholders are also worried over relentless disturbances in the market, stressing that the relocation would just get worse the precarious state of the nation’s power sector.
Though the Nigerian Electricity Regulatory Commission (NERC) was empowered by Parliament through the Electric Power Sector Reform Act of 2005 to act as an independent body for technical and financial guideline of the electrical power industry, the consistent interfe0rence in the sector is seen as part of the failure of the body to bark and bite.
The sole regulator has been implicated of being accountable for policy summersaults and gross mismanagement of consumer self-confidence as well as developing investment apathy.
In 2015, NERC transferred to totally carry out a Multi-Year Tariff Order (MYTO) developed in 2015 and the Minimum Remittance Order for the Year 2019, the tariff system, which, if implemented regularly as created, would have resolved the accumulated boost and decrease effect of the proposed tariff hike on customers.
The commission, with headquarters in Abuja and zonal offices in the 6 geopolitical regions, had performed public hearing on the proposed increase, however defied differences to announce that execution of the MYTO would take effect on April 1 this year. It later delayed the application to July 1, following the outbreak of Coronavirus.
Seeing that the Minister of Power, Sale Mamman, had actually firmly insisted prior to NASS members that there was no going back on the boost, as government was strained by huge costs on the sector, the distribution business backed the move with huge media campaign, including advertorials in nationwide dailies to inform their clients of the new tariff strategy.
But couple of days to the increase, NERC supposedly back-pedaled, distancing itself and the Federal government from the tariff hike prior to NASS.
Remember that the DisCos are currently challenging the power of the regulator in court. The 11 energy business, which act as profits collectors in the sector, have been severally criticised as being the weakest link in the sector in addition to not remitting earnings precisely.
Privatised in 2013 to reverse epileptic power supply scenario, the sector has actually been bothered by financial crises including over N4 trillion.
The Federal Government had spent about N2 trillion to subsidise electrical power usage in the last 5 years, but current economic realities are bad. Over N108 trillion loan has been approved in the last one year alone. This is combined with the difficulties postured by COVID-19 and crash in prices of commodities.
Consequently, federal government has actually been seeking methods to exit payment of subsidy in both petroleum and power sectors.
Since the relocate to increase the tariff was revealed, stakeholders in the sector have actually increased agitation versus substandard efficiency of the power sector, particularly in respect of poor service shipment, considering that most of customers are not metered regardless of introduction of Meter Property Providers (MAPs) scheme, while others raised concern on requirement to conserve the market with cost-reflective tariff strategy.
An associate teacher of Energy Law at the University of Lagos, Yemi Oke, informed The Guardian that the timing of the tariff argument was ill-conceived, insensitive and apparently desperate, worrying that consumers ought to have best to change, pull out or determine what level of electrical power consumption they could manage through proper and honest metering.
He stated that the nation, as far as the power sector is concerned, left “leprosy to treat ringworm” as the issue in the sector remained unresolved.
” Those issues that make tariffs increment preferable by DisCos are still there. Issues that make consumers resist more boost in tariffs are still there. Those basic problems that drag the power sector down in Nigeria have remained powerful.”
An energy legal representative, Madaki Ameh, did not see any validation to increase tariffs and asked the public to rise versus the effort, which he referred to as “deceptive.”
Ameh said: “There was an extensive review of the tariff problem and a number of town hall meetings were held throughout the nation, where tariff increases were roundly turned down by consumers. At the end of that exercise, NERC provided guidelines rejecting the demand of DisCos to review tariffs to the so-called ‘cost-reflective’ levels. What has altered between April 1 and now? What happened to all those townhall meetings? Were they just for program? What is so immediate about the tariff boost now, particularly as there has been no significant enhancement in service delivery by the DisCos?
While the DisCos were accused of trying to get the government heavily indebted to the sector so regarding paralyze its control of the industry, knowing that ministries and companies currently owe the energy companies over N100 billion, as revenue shortfall strikes N1.2 trillion, representative of the DisCos, Sunday Oduntan, denied the accusations.
He also rejected that the DisCos did lobby NASS to stop the tariff increase, adding that the companies were prepared to effect the tariff review till NASS persuaded them to defer the decision.
Oduntan stated that executives of the utility business, where government own 40 per cent share and represented at the board were in Abuja, thanks to the Reserve bank of Nigeria (CBN) before being invited by the lawmakers.
” We are really ready, but we are mindful of the obstacles faced by Nigerians. Timing is extremely crucial, but the regulator chooses the timing and the mode, including the real level of tariff,” he stated.