DisCos: Senate Tariff Resolution will Fail Power Sector

The Association of Nigerian Electricity Distributors (ANED) yesterday said the Senate resolution that stopped the implementation of the 2015 Multi -Year Tariff Order (MYTO) will have adverse effects on the power sector.

According to its Executive Director, Advocacy and Research, Sunday Oduntan,  a market priced tariff is a fundamental requirement under the agreements signed between Distribution Company (DisCo) operators in the Nigerian Electricity Supply Industry (NESI) and the Bureau for Public Enterprises (BPE), raising the concern for sanctity of contract.

The association in a statement, lamented that the decision will culminate in the  absence of a market priced tariff that  creates the possibility of failure by the operators.

He said such a failure will be at a price that the government can ill-afford in these times of dire economic challenges.

The group maintained that a market priced tariff is critical to address decades of under-investment such as the five million metering gap in the sector.

Oduntan insisted that globally, electricity reforms have always been tied to increased investment, resulting in improved production efficiency. Such investment is predicated on access to capital which will be jeopardised in the absence of a market priced tariff, he added.

He said the absence of a market priced tariff will endanger the viability of the entire value-chain of distributors, generators, transmission and gas suppliers, resulting in the failure of the sector.

He said: “As the upstream operators will not receive required payment (DisCos only receive 25 per cent of the revenues associated with the tariff.

“Failure of the sector will result in, among other things, loss of employment and livelihood for approximately 50,000 Nigerians, indirect job losses from factory and other business closures, possibly in the millions; and a related outcome of discouraging further investments in the development of gas reserves and production for local consumption; and

“Expected performance improvement, with appropriate investment, on the other hand, will lead to a reduction of tariffs in subsequent years.  This is empirically supported.

“Fellow Nigerians, suspending the implementation of the tariff will leave us in continued darkness, with diminished and no future prospects of growth of our economy.”

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