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Foreign exchange may shoot up electricity tariffs

By Sulaimon Salau
17 March 2015   |   4:26 am
Besides, the utility firms are worried about the increasing debt profile which is mostly traced to government agencies: the army, police, ministries and parastatals and para-military forces, which the Discos claim
Sam Amadi

Chairman, NERC: Sam Amadi //Photo: samamadi.org

Govt agencies shun bills, Presidency orders direct deduction, prepaid meters

INDICATIONS have emerged that the free fall in the value of naira against other currencies would soon take its toll on electricity consumers, as the Nigerian Electricity Regulatory Commission (NERC) plans for another tariff review in June this year.

The Chairman, NERC, Sam Amadi, at the Nigerian Power Conference in Abuja, yesterday confirmed that the commission is preparing for another tariff review in June-July, “which may likely reflect the current position of the exchange rate.”

This position was necessitated by the groans of the Electricity Distribution Companies (Discos) over what they described non-cost-reflective tariff coupled with increasing costs arising from the exchange rates factors.

The Central Bank of Nigeria, had recently closed the retail Dutch Auction System/wholesale Dutch Auction System (rDAS/wDAS) segment of the foreign exchange market and quoted an exchange rate of N198/US$1.00 as the official selling rate, but the currency goes for about N220 at the Bureau De Changes across the country.

Besides, the utility firms are worried about the increasing debt profile which is mostly traced to government agencies: the army, police, ministries and parastatals and para-military forces, which the Discos claim, owe no less than 70 per cent of their debts.

The Acting Chairman, Presidential Task Force on Power (PTFP), Clement Adeyinka Oke, told The Guardian that Mr. President has directed that the bill should be deducted from the accounts of the MDAs.

Besides, he stated that prepaid meters would now be installed in all the necessary government, military and para-military offices very soon to ensure adequate remittance of electricity bills.

“This is one of those things that government is looking at (deduction from source) for every government agencies, and once that is done I believe the Discos should be in a position to get their money directly from the government.

“We are also planning installation of prepaid meters, so if you don’t pay, the meter will knock-off automatically. I believe when we begin, the agencies will also see that they cannot continue with those bad practices. We already doing the compilation and it is already in progress, very soon you will see the results,” Oke said.

The Managing Director, Eko Electricity Distribution Company, Oladele Amoda had recently estimated the debt by the military and government agencies at about N700, which he said was posing threat to investments by the Disco.

The Managing Director, 4Power Consortium, Mattew Edevbie, who also berated the increasing debt profile, said military and government have been proving difficult in paying for electricity, but the Nigerian Navy should be commended for prompt payment.

The Director-General, Bureau for Public Enterprises (BPE), Benjamin Dikki, in his evaluation of the sector in the past 12 months, said the transaction of the defunct Power Holding Company of Nigeria (PHCN) was the “most difficult” handled by the BPE in its last 20 years of operation.

He, therefore, noted that monopoly still exist in the power sector unlike the telecoms industry, because “we found that a Lagos firm cannot take care of a none-performing company in other states of the federation.”
He, therefore, tasked the private sector operators in the sector to increase investment and adopt advanced technologies.