Suspending new electricity tariff will lead to darkness, say DISCOs

Firms give condition for reduction

THE umbrella body of the 11 electricity distribution companies (discos), Association of Nigerian Electricity Distributors (ANED), yesterday reacted to the directive from the Senate ‘suspending’ the new electricity tariff.

The association warned that suspending the implementation of the tariff would leave the country in continued darkness, with diminished and no future prospects of growth of the economy.

Besides, the discos said the new tariff would guarantee adequate investments in the sector, which would ultimately lead to a reduction in tariff in the future.

Meanwhile, Executive Director, Advocacy and Research of the association, Mr. Sunday Oduntan, in a statement yesterday, also cautioned that the absence of a market priced tariff would create the possibility of performance failure by the operators.

The statement said: “The Senate on Tuesday, February 16, 2016 passed a resolution directing the Nigeria Electricity Regulatory Commission (NERC) to suspend the recently-implemented electricity tariff (MYTO-2015).

“However, implementation of this resolution is not without consequences and the following are a few of them. 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.

“Such a failure will be at a price that the government can ill-afford in these times of die economic challenges.”

Oduntan, who noted that failure of the sector would 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, stressed how this would discourage further investments in the development of gas reserves and production for local consumption.

“A market priced tariff is critical to address decades of under-investment (for instance, the five million metering gap) in the sector.

“Worldwide 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.

“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 further said.