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Why NERC is unable to grow sector, by group

Why NERC is unable to grow sector, by group

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The Nigerian Electricity Regulatory Commission (NERC) is unable to grow the power sector because of the commercial and technical problems in the supply value chain, a source at the Association of Nigerian Electricity Distributors (ANED) has said.

The source, who preferred anonymity, said the sector has not been able to perform optimally because NERC has refused to resolve the fundamental problems plaguing it.

In an interview with The Nation on phone, the source said the 11 power distribution companies (DisCos) are not getting the right value for the electricity they are distributing to consumers, adding that the issue is retarding growth.

The source said: “Traditionally, the power distribution firms are supposed to distribute the quantum of electricity coming from their counterparts in the generation arm – the power generation companies GenCos) – to the final consumers at a price that is beneficial to them and the market.

‘’However, the reverse is the case as the tariffs are not commensurate with the price of electricity in the market. Imagine a situation where a buyer buys a product at N50 and sell it at 50kobo. Where is the profit for the buyer?

The source said the DisCos would continue to grapple with liquidity problems until a review of the tariffs is done by NERC.

The source accused NERC of being inactive when it was supposed to act. “As a matter of fact, a review of the tariffs is expected to take place every six months. However, there was nothing like that in the past six years. The Multi-Year-Tariff-Order (MYTO) is not being implemented in line with the Nigerian Power Sector Reforms Act. Therefore, how can the DisCos get the right price for the product they are supplying their customers?

‘’The sector is fundamentally unable to close the gap in the tariffs it is passes to the consumers. This, the source added, has resulted in the inability of the DisCos to meet their obligations by subsidising electricity.

The source urged stakeholders to come together and address the problems, adding that the sector would not grow until this was done. He said the Federal Government had intervened by giving N750billion to the sector, which would not do much due to the plethora of problems besetting the sector.

The source said the Nigerian Bulk Electricity Trading Company (NBET), Transmission Company of Nigeria (TCN), the GenCos and the DisCos had some problems, which ranged from paucity of funds to dilapidated infrastructure, among others.

Another problem that is inhibiting the growth of the DisCos and the sector, according to the source, is poor exchange rates. He said the DisCos bought some equipment at N160 per dollar some years ago, but that this had gone up to N360 per dollar.

‘’This makes it difficult for the operators to get enough dollars to buy equipment for maintenance. These problems have become  constraints to revenue generation for Discos,’’ he added.

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