CEM REPORT | From December this year, Nigerians maybe compelled to pay actual cost of energy consumed as Federal Government plans to remove tariff shortfall.
Speaking at a media workshop in Abuja yesterday, a member of Power Sector Recovery Programme (PSRP) Secretariat, Balije Madu, revealed this.
“We are aiming that tariff shortfall goes away by end of the year.”
He also added that although electricity capacity in the country, recently is experiencing certain challenges, government has sustained the grid at about 4,500 megawatts.
Madu, admitted that nine years on, since the sector was privatised, it still remained at a foundational level, noting, there is need to trim expectations from the sector.
According to him, until the foundation is properly laid, the capacity expected from the sector could remain elusive.
This comes as the Nigerian Electricity Regulatory Commission (NERC) said emerging challenges, especially insecurity, are already frustrating the sector.
Sanusi Garba, Chairman NERC, said the inability to fix adequate tariffs led to challenges facing the distribution companies, adding that the development affected the financial viability of the distribution companies.
“A lot of things happened relating to the financial viability of the DisCos, because if tariffs were static and they have inflation and FX issues then distribution companies will have under-recovery of revenue,”
He further added that the situation is adversely affecting the companies in raising necessary capital and operating expenses.
According to him, the challenges with the utility are not only about funding but also governance, capacity and other issues.
“The challenges are further complicated by the situation in the country. A number of the DisCos are impacted by security challenges and all kinds of things impacting on their capacity, either to deliver service or even to recover their revenue,” Garba said.
Garba said a lot needs to be done to get the DisCos out of the current quagmire.
Guardian reports that, between 2015 and 2020, the shortfall reportedly stood at about N2.4 trillion, averaging N200 billion yearly. The shortfall accrued from suppressed charges for electricity consumption.
DisCos as well as the Nigerian Bulk Electricity Trading Company, are at loggerheads with banks over the inability to pay back loans and remit invoiced amounts,
The Minister of Finance, Budgets and National Planning, Zainab Ahmed, had earlier said that the Federal Government had quietly removed all subsidies in the power sector with a plan to gradually end subsidies on petrol.
“We are cleaning up our subsidies. We had a setback, we were to remove the fuel subsidy by July this year but there was a lot of pushback from the polity. We have elections coming and also because of the hardship that companies and citizens went through during the COVID-19 pandemic, we just felt that the time was not right, so we pulled back on that.
“But we have been able to quietly implement subsidy removal in the electricity sector and as it is, as we speak, we don’t have subsidies in the electricity sector. We did that overtime by carefully adjusting the prices at some levels, while holding the lower levels down,”
Recall, CEM had reported, that Federal Government initiated the PSRP with the support of the World Bank to increase access to adequate, reliable and affordable electricity in Nigeria.
Also one of the policy interventions of the Federal Government is the National Mass Metering Programme (NMMP),