Provide Solution To N1.3t Electricity Tariff Gap, DisCos, Investors Urge FG
Electricity Distribution Companies and investors in the distribution chain have called on Federal Government to bridge the N1.3 trillion electricity tariff gap to enable DisCos meet their performance agreement with the government.
The DisCos, who made the call under the Association of Nigerian Electricity Distributors, at a news conference in Abuja on Tuesday, said bridging the gap would help improve service delivery.
Sunday Oduntan, the Executive Director Research and Advocacy, ANED, said the gap remained the fundamental problem to effective performance of the power sector since privatisation.
Oduntan said: “The tariff gap is between what government has specified as the price of electricity that we distribute or retail and the true cost of the product.
“It is this gap that has solely contributed to the excess of N1.3 trillion that the DisCos are carrying on their financial books.”
He said the gap was an impediment to both the sustainability of the electricity market and the ability of the investors to meet the obligations of their performance agreement with the government.
Oduntan said: “This should result in improved metering, customer service, increased customer connections that electricity consumers demand and deserve, this gap remains unaddressed by the government.
“The DisCos are not advocating for a tariff increase, but without addressing the tariff gap, it will be difficult to expect the DisCos to perform, that is why it is the duty of the government to address the tariff gap.
“So, if the minister challenges the DisCos on performance improvement, he has every right to do so.
“However, without positioning the DisCos to succeed by addressing the tariff gap, which the government has mandated and engineered, is completely unfair.
“It is the tariff gap that is responsible for the debt that DisCos owed Nigerian Bulk Electricity Trader.”
Oduntan also said it was important for the Nigerian Electricity Regulatory Commission to remain independent as true regulator of the sector.
He said: “We will not have the environment that is critically important for the investment that is urgently needed to turn the sector around.
“A regulator that constantly receives ministerial directives that are outside the general policy specifications of Electric Power Sector Reform Act 2005, will not inspire the confidence that has led to all successful electricity reforms universally.”
Oduntan said the magnitude of investment in the sector requires transparency, consistency rule making that was only guaranteed by an independent regulator.