Ten years after the privatisation of the Nigeria electricity supply industry, the objectives of the reform have continued to elude the country. Stakeholders believe the sector would make more progress if a cost-reflective tariff regime is adopted, writes NSE ANTHONY-UKOTen years after the partial privatisation of the Nigerian Electricity Supply Industry , the industry is still grappling with sub-par performance.
The underperformance of the sector can be attributed to deep commercial, governance, and operational issues that have plagued the industry, particularly, stakeholders say, the lack of a cost-reflective tariff, which impedes investment in the NESI. The tariff structure aimed to ensure that consumers who receive fewer than eight hours of electricity per day do not see tariffs increase until the quality of service improves
Already, the country’s power generation has stagnated at 4,500 megawatts despite having a generation capacity of 13,000MW. He however said that 10 years after privatisation, the sector has seen some growth with companies like Egbin, Mainstream, Geregu and Ughelli making strides in the generation sub-sector while Eko and Ikeja Electric have also distinguished themselves as major players in the part of distribution.
An energy expert and country director, Energy Market and Rates Consultant Limited , Rahila Thomas, stated that rising inflation, forex and other critical variables like generation capacity, and regular review of the tariff should be sacrosanct in the sector. “Unfortunately, all these monies are resting on the books of the Discos and have impaired their ability to attract funding to improve their networks,” Thomas who spoke during a panel session at the just-concluded NESI roundtable in Abuja said.
In addition, he argued that while government institutions and agencies must pay for electricity supply and access to forex must be given to the power sector, policies and regulations must be stable and predictable. Besides, the inability of Discos to charge cost-reflective tariffs, has rendered their businesses ‘unbankable’ and impossible for them to raise debt from banks and capital markets, or even from prospective investors.
While admitting that it would be difficult to grow the sector while relying on government’s intervention or funding, she noted “We need to develop a bankable proposition, and that requires a cost reflective tariff and right pricing of meters”. Besides, part of the operation of the power sector is dollar-denominated. The federal government has to bear in mind that most of the equipment, plants and machinery used in the power sector are imported.
While there have been attempts at ramping up the provision of meters in the last few years, to make it easier, the government must continue to roll out policies to support Meter Access Providers .
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