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Discos criticise small power entrepreneurs as tariff shortfall hits N1.3tr


Distribution companies (Discos) have criticised Federal Government’s attempt to improve quality of power delivery and breaking their captive monopolies through the introduction of small power entrepreneurs.
Rather than supporting it, the profit-driven Discos describe the current rural electrification initiative, mainly targeted at improving the fortunes of small and medium enterprises (SMEs), as an infringement on their franchise and areas of operation.

But Government would have none of that, saying there is no exclusivity or monopoly of franchise for as long as services remain poor.

Despite attempts to maximise profit through estimated billing, electricity distributors claim their tariff shortfall has now risen to N1.3trillion this July, from N1trillion with a monthly accumulation of N27billion.

The Association of Electricity Distributors (ANED), attributed this shortfall to the disparity in average retail tariff of N32/kWh versus actual energy cost of N65/kWh amid alleged politicisation of Nigeria’s tariff system.
Against this backdrop consumers are at the receiving end of the purported tariff shortfall to the extent that estimated billing for unmetered customers have risen by over 300 per cent in some cases.

Hundreds have already abandoned grid distribution in favour of alternatives like solar, inverters, generators etc to contain their astronomical electricity bills from the Discos.

However, the Executive Director, Research and Advocacy, ANED, Sunday Oduntan, said on Sunday, that the N1.3trillion debt rides on the back of various regulatory and policy inconsistencies and interventions, and impedes Discos’ ability to either make new equity investment or access debt financing required for meeting their performance obligations.
According to him, no lender will provide debt financing to the Discos with debt-laden books and inability to project a cash flow that will repay the loan, given the non-cost reflective nature of the tariff.
Oduntan stated: “There is no doubt that determination of electricity tariff in sub-Saharan Africa is a balance between politics, customer affordability and efficiency. 

The Discos have found themselves in a situation in which the tariff has been politicised to preclude their ability to inject the required efficiency into the sector.

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