Power tariff: Stakeholders disagree over suspension of hike until 2020

Only NERC can droop tariff hike — Iledare

Power tariff: Stakeholders disagree over suspension of hike until 2020

By Udeme Akpan and Ediri Ejor

Stakeholders in Nigeria’s energy sector, on Wednesday, disagreed over the suspension of tariff hike till 2020.


In an interview with Vanguard, National Secretary, Nigeria Electricity Consumers Advocacy Network, (NECAN), Mr. Uket Obonga, who backed the National Assembly for suspending it, stated the brand new tariff failed as a result of the setting was not prepared for it.

Obonga stated: “The operators haven’t but been capable of generate, transmit and ship enough and regular electrical energy to shoppers in all elements of the nation.


“Many consumers, who experience darkness more than light, do not have pre-paid meters to control their bills. Consequently; their exploitation could have worsened if the new tariff was not stopped.”


He added: “The time has come for all Nigerians who’re docile to get up and problem lots of anomalies within the sector.

READ ALSO: NERC, Reps differ on Feb 1 energy tariff hike

National Assembly has no energy

However, former president, Nigerian Association of Energy Economics (NAEE), Prof. Wumi Iledare, who famous that the National Assembly mustn’t have gotten concerned within the matter, stated: “It is not part of the duty of the National Assembly to suspend the tariff. The Nigerian Electricity Regulatory Commission (NERC), controls tariff, as part of its regulatory function. It is only NERC that can suspend the hike in tariff.”

Continuing, he stated: “I’m not positive the National Assembly has the constitutional energy to droop an act of the Executive with out an Act. A handed movement by the National Assembly is nothing however a choice expression that isn’t binding on the Executive, in my view. Now, if the tariff is already ordered by NERC,

the DISCOs might set a decrease price as a strategy to palate COVID-19 impact, however can not cost a better tariff than prescribed by NERC.”

Too early to anticipate revenue

He added: “However, investors in the sector should know that the pay-out period cannot be now. It is some distant years away. I am not sure the core business investors have good understanding of the business model for power. Yes, low tariff is what you get in this business without proven capital investment in infrastructure such as metering all customers.”

Sector will undergo with tariff hike

Furthermore, Executive Secretary, Association of Power Generation Companies, (APCO), Dr. Joy Ogaji, stated: “The suspension of the fee reflective tariff could also be justifiable from a political viewpoint. However, we’re apprehensive concerning the financial implication of this suspension on the operations of the sector.

“Recall {that a} new tariff was imagined to take impact on the first of April, 2020. However, this was prolonged by three months because of the Coronavirus pandemic. An additional extension of this evaluation, coming from the National Assembly, sends a adverse sign to the operators and potential buyers.

“The electrical energy market is attempting to maneuver right into a sustainable construction ruled by demand and provide such that there is not going to be authorities interventions. As such, operators out there should promote energy at a worth that’s reflective of the price of manufacturing and an affordable margin for buyers. Now, energy just isn’t rightly priced, particularly on the DISCOs stage. There is an imbalance out there.

“As it stands, the DISCOs can not pay 100 % to the Nigerian Bulk Electricity Trading Plc, NBET, therefore there’s a shortfall in cost to GenCos and in flip to

gasoline suppliers. Since the market just isn’t sustainable, no new investor might be keen to return into the ability sector.

“In view of the foregoing, the electricity market growth will be stifled which will in turn slow down the industrial development in Nigeria as power as we all know is a key driver of industrialisation. Therefore, delayed tariff increase, will lengthen the electricity market to reach a self-sustaining point. The power sector will always need intervention this way; and such is not healthy for the sector.”

READ ALSO: Hike in energy tariff just for higher class – Minister

Need for transparency 

Ogaji added: “To enhance the poor electrical energy scenario, it has develop into pertinent to institute transparency within the billing, assortment and remittance of the DISCOs. In addition, a viable framework for metering have to be put in place to enhance assortment efficiencies within the sector. The Nigerian electrical energy sector is plagued with historic infrastructural challenges, particularly within the distribution and transmission subsectors of the sector worth chain.

“Due to the weak networks, DISCOs are only able to off-take between 3,500 megawatts, MW and 4,000mw, while the transmission wheeling capacity is about 4500mw. This calls for critical and long overdue revamping of the networks and infrastructures. It is also advisable to explore alternative transmission medium as well as alternative distribution means. There is a paucity of data in the sector and this must be addressed. The need for a clean, credible and real –time data in the sector or any sector for that matter cannot be overemphasised.”

Vanguard

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Power tariff: Stakeholders disagree over suspension of hike until 2020

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