Tariff Hike: Power sector collapse imminent- Discos

...as peak generation drop by 1021mw

Minister of Power, Babatunde Fashola

By Oluwagbenga Bankole

Indications emerged at the weekend that the Nigeria power sector may collapse which will put the whole country into total darkness if the new electricity tariff is not maintained.

Implementation of the new electricity tariffs which are intended to be cost-reflective over a 10-year period has become a bone of contention between the Discos and Nigerians.

The Senate reportedly directed the Federal Ministry of Power, Works and Housing, the National Electricity Regulatory Commission (NERC) and the Distribution Companies to suspend the implementation of the new electric power tariff. It would be recalled that in December 2015, NERC introduced the Multi-Year Tariff Order to come into effect on 1 February, 2016.

The Federal High Court in Lagos last week dismissed an application by the Nigerian Electricity Regulatory Commission (NERC), seeking to stay proceedings in the suit on electricity tariff hike.

Speaking exclusively with our correspondent, the Executive Director, Association of Nigeria Electricity Distributors (ANED) Mr. Sunday Oduntan said that darkness looms in Nigeria and the power sector is at the verge of collapse if the new electricity tariff is not maintained.

Oduntan who told our correspondent that although they will not shutdown their sub-stations if the tariff is not maintained, but said it will get to a time that there will be unavailability of gas to fire the power plants and this according to him will put the country into total darkness.  

“60 per cent of the new tariff belongs to the Generation companies (Gencos), 11 per cent belongs to the Transmission Company of Nigeria (TCN), 25 per cent to the Discos, while the remaining 4 per cent belongs to other stakeholders. We will not shutdown anything if the tariff is not maintained. We will do our best to maintain the system. We are not saboteurs, but when it gets to point that there is no more gas. We can’t pay the gas supplier to fire the gas station that means they won’t be able to generate and when they cannot generate we cannot distribute anything,” he said.

He told our correspondent that what we are saying now is that there should be appropriate pricing which market is pricing, there is a need for price that will cover the cost of operation and production. 

Oduntan however said that they are in consultation with all stakeholders to ensure that the new tariff is maintained so that the system will not collapse.

He confirmed to our correspondent that the new tariff has kicked off since February 1 and those who use prepaid meters are already paying the new tariff, while others will start paying from March 1.

Justifying NERC and Discos stance, the immediate past Chairman of NERC, Dr. Sam Amadi, described the Senate’s directive as illegal, unconstitutional and a direct encroachment on executive independence.

He said that “the order by the Senate for NERC to rescind the tariff is a direct infringement on the independence of the executive to initiate policies, in this case through NERC. It is a subtle derogation of the powers of the executive. It offends the concept of separation of power. The legislature should not interfere and direct executive action. That is clearly against the law. It is unconstitutional.”

Amadi explained that apart from the Senate lacking the constitutional right to give such a directive, NERC, as currently constituted, was not competent to suspend or rescind the tariff order issued by its former Board.

He argued that until a new board was reconstituted to consider reviewing or totally suspending the order, “nobody anywhere can validly review or suspend the current tariff.”

Meanwhile, the Federal Ministry of Power on its official website said Nigeria achieved energy peak generation of 4053.3 megawatt and energy generation 3,697. 31MW while energy sent out was 3, 578MW.

This shows 1021MW slide from the 5,074MW, highest peak generated on February 2. It is also far below the peak demand forecast of 12,800MW.

Oduntan attributed the decrease in power supply to the attack on Escravos gas pipeline, which he said led to a loss of 160 million metric standard cubic feet/day, MMSFCD, of gas.