NSE flays planned hike in electricity tariffs, seeks partnership on CNG adoption
Using 30 per cent inflation as a rationale for increasing electricity tariffs by electricity distribution companies (DisCo) is flawed and not supported by logic, the Nigerian Society of Engineers (NSE) has said.
The President of the Society, Tasiu Sa’ad Gidari-Wudil, stated this yesterday in Abuja, explaining that although it is the industry norm to use the Central Bank of Nigeria (CBN) and Nigeria Bureau of Statistics (NBS) figures as a basis for tariff adjustment, most of the DisCos cite figures that are at variance with the current reality.
The national umbrella body of Nigerian engineers also alleged that most DisCos quote consultancy outfits as their sources, saying the assumptions could give rise to a high weighted average cost of capital (WACC).
“While citing changes in operating cost (OPEX) expenditure as the basis for their request for review, most of the licensees failed to justify the request since they did not show evidence of increase in their circuit length, transformer numbers, increase in their staff salaries, increase in metering and customer numbers.
“It was also observed that the DisCos spend a substantial amount of their approved OPEX for payment of consultancy services and technical partnership payments that do not translate to any operational efficiency,” he said.
While calling on the Nigerian Electricity Regulatory Commission (NERC) to ensure licensees are only allowed prudent and justifiable cost escalation, NSE observed that none of the DisCos has come up with verifiable evidence of their contracted feeder supply availability index to warrant or justify the feeders upgrade and or customer reclassification as proposed.
Gidari-Wudil said DisCos should have an automatic and seamless arrangement in their vending server that will enable refunds to all customers who purchased meters under the MAP or whatever arrangement.
NSE President said the body is yet to be approached for input on the move by the government to promote the use of compressed natural gas (CNG) as a fuel option.
He noted that the adoption of CNG as a viable alternative fuel has significant advantages such as being a cleaner burning fuel and emitting lower levels of harmful pollutants.
“Incidentally, the NSE has four divisions under its fold that have relevance to the subject matter of conversion from PMS to CNG. Therefore, We have mandated the leadership of the Automotive/Locomotive Engineers Institute of Nigeria (AutoEI), the Nigerian Institution of Mechanical Engineers (NIMechE), the Nigerian Society of Chemical Engineers (NSChemE) and the Nigerian Institution of Petroleum Engineers (NIPetE) to tackle this challenge by developing practical solutions for effective conversion from PMS to CNG,” Gidari-Wudil stated.
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