Electricity Discos demand cost-reflective tariff

The Electricity Distribution Companies in the country under the aegis of Association of Nigerian Electricity Distributors (ANED) have debunked the rumour that Discos are planning to increase electricity tariff, stating that what they are demanding is ‘Cost Reflective Tariff’.

The NERC recently sent a notice of intention to review tariff to Electricity Distribution Companies in the country and this has led to several consultations on tariff review between Electricity Distribution Companies and their customers. Since the consultation started, Nigerians are in limbo over a possible increase in tariff.

While speaking exclusively with TOTALNEWS247, the Director of Advocacy and Research for ANED Mr. Sunday Oduntan said that there is no Disco in the country that is making profit not or not running at a loss, adding that asking for subsidy from the government would have being the best thing for them in the sector, but they know the current situation in the country.

He also said that if the N32b outstanding debts the federal and state governments owe them are paid, the money would be able to reimburse the sector.

“What we are now asking for is cost reflective tariff, not an increase in tariff. We need tariff that will reflect the cost of production.  People have to pay their bills. When people pay their bills, things will begin to get better for us. Even now that electricity supply have improved, it is surprising that our collections losses have also increased, simply because there is an increase in non-payment. What we are selling out to our customers is not cost reflective, Oduntan said.

Similarly, the Deputy Managing Director of Ibadan Electricity Distribution Company (IBEDC) Engr. John Ayodele has also said that a cost reflective tariff of electricity is key to the success of the privatisation of the Power sector, adding that efficient power pricing has been a challenge in the Power sector.

Ayodele said that the power sector is characterized by Substantive up-front fixed cost, plethora of variable costs such as peak and off-peak seasons and users (commercial or residential) and geographic area (urban or rural).

He further stated that, “electricity tariff in Nigeria is currently below production costs when discounted for losses, theft and unwilling to pay customers. Industry can barely generate enough revenue to cover operating cost, with little or nothing for capital projects. Discos have no cash flow to source funds in the international market as commercial loans cannot be used for power projects.”

He said that while the power sector regulator must set affordable tariffs, the present tariff is unattractive to investment in Nigeria, noting that challenge in setting tariffs lies in the fact that the bulk of residential customers are very sensitive to price changes