Fresh electricity tariff hike underway

* FG to open talks on power tariff review, execution in Q3
* NERC misses votive appraisal six times

A fresh review and implementation of electricity tariff in Nigeria is underway.

This move, which, according to investigation by New Telegraph is a result of pressure by power investors, is buoyed by surge in deficit recorded across the power value chain.

For instance, Chairman of biggest thermal plant in sub-Sahara Africa, Egbin Power plant, Mr. Kola Adesina, told this newspaper on the side line of Ikeja Electric (IE) Young Engineers Programme (YEP) inauguration in Lagos, that the fresh review and implementation of the Multi Year Tariff Order (MYTO) is the best way to go for Nigeria Electricity Regulatory Commission (NERC).

Talks on the review and implementation, a source at NERC told this newspaper, is slated to begin in the third quarter of this year.

NERC, Adesina said, had already missed the contractually agreed review six times since the November 1, 2013 privatisation of the power industry.

The inability to effect a major review to bring about a cost-reflective tariff, he said, is one of the major hindrances to efforts by all stakeholders to end epileptic power in the country.

The distribution companies have kept on mounting pressure on government to review the tariff, but Adesina said that the need to mount pressure on government should not be limited to DISCOS.

All Nigerians, he said, should ensure that the review is carried out and implemented by NERC, because DISCOS, GENCOS and gas producers are all in business and without a cost reflective tariff, return in investment (RoI) cannot be guaranteed and without RoI, no meaningful success would be recorded in business.

“Last Wednesday was the first day for meter roll out and I believe by last Thursday most of them (Meter Asset Providers) would begin to see how fast they can roll out the meters. But my own view has always been that when you have a problem of this nature, you need a holistic way,” explained.

“But because the narrative of the power sector has shifted to metering as the supposed key solution here, we want to see if that alone can solve the problem, but I know it won’t solve the problem.”

Commenting on other issues that need to be addressed, Adesina said: “We still have many others within the value chain that needs to be solved, I give you an instance. Recently, we had serious power outage in Nigeria and the reason for that was gas. The gas provider had a leakage on the pipeline and in solving the leakage; every generation company had to run down their turbines because they can’t be supplying gas while they are preparing what needs to be repaired.

“We at Egbin have fixed all the turbines and all are functional to generate 1,320 megawatts today, but there is no gas and the system can’t be powered, gas available to us can probably give at best today 750 megawatts, that’s what we can do by way of gas supply. We have a plant with installed capacity of 1,320 MW, which it had not had since inception; this is the first time all the units are available and ready to work and there is no gas, so, if gas is the issue, we should ensure gas availability as a nation.

“For us to have a holistic approach to the problem, Nigeria should not have just one pipeline supplying everyone. Nigeria should have multiple pipelines to all the power stations we have, such that if there is a shortage in one, they can divert gas to the other ones, that’s one side.”

He recalled that recently various speakers and president of the African Development Bank (ADfB) had said that without a cost-effective tariff, which is the fundamental in the power sector, Nigeria may not be able to get uninterrupted power supply.

“Once there is cost-reflective tariff and all the critical enablers, investors love profit and would want to make legitimate money,” he explained. “All those things we want to put in place can be put in place if the fundamentals are right.”
He declared that the major reason DISCOS are not doing well is because of lack of cost-reflective tariff.

“We ought to have got six tariff reviews in Nigeria. Six times and a tariff review hasn’t been done and yet high level of service delivery is expected? DISCOS are not doing well because the fundamentals are not right,” he declared.

“DISCOS are supposed to use N305 per dollar to charge consumers for the power they are using, instead they are using N199 to a dollar, so if the equipment got by DISCOS goes for N360 per dollar, which is the open market rate, then there is a big issue, we can’t be using N199 for DISCOS to charge consumers whereas generation charge DISCOS at N305 per dollar, someone is losing money and it’s the DISCOS.