By
Idowu Oyebanjo
The much talked about increase in
electricity tariffs became operational with effect from 1st of February 2016.
As consumers brace up for the new tariff regime, there are issues worth noting
which will determine the sustainability of the power reform process.
The main focus on the issue of cost
reflectivity has been the Distribution Companies (Discos) because they act as
the conduit pipe for the collection of monies to be shared by all the
stakeholders involved in the provision of energy for the generation,
transmission and distribution of electricity to consumers. In effect, they are
the cash boxes of the entire electricity value chain. Although 25% of collected
revenue is theirs to keep, 60% goes to the generating companies (Gencos), 11%
to the Transmission Company of Nigeria (TCN), while the remaining 4% goes to
other stakeholders like NERC, NBET etc.
One of the main issue is that the cost
reflective tariff is hinged on a recent performance agreement reached between
Discos and NERC. Given that the new Commissioners for NERC have not been
appointed, albeit a care-taker committee of career officers have been running
the show, it is clear that the enforcement of the service level agreements
(SLAs) in the performance as agreed will lag behind. There should be a tracking
of performance right from the word Go!
But the Discos cannot perform any miracles at
all. The investment to be made is huge and will take many years before the
overall impact can be felt. They cannot fix the technical losses in the wires
and transformers from the monthly bills collected from unimpressed consumers
who are likely to display a recalcitrant attitude towards the payment of their
bills. At the moment, Discos have huge debts to finance as many of the
technical partners have left for lack of liquidity in the sector even after two
years. The current 187 billion naira deficit is a case in point. This deficit
has the potential to be recurrent year after year if power system engineers are
not allowed to lead the privatisation process. Economists and Lawyers will
never have a clue. Technically speaking, the contract between a Disco with the
federal government is no longer valid once the technical partner has abandoned
the partnership. Don't forget the sale of government's asset was based, in
part, on the technical capability of the so call "technical partner".
Nigeria
