Senate Worries over Liquidity Crunch in Power Sector

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The Senate Committee on Power has expressed concern over the liquidity crunch in the power sector.  It has also expressed doubt over the financial and technical competence of the private investors in the sector.  The Chairman of the committee, Sen Enyinnaya Abaribe, expressed the concern in a statement by the Head of Public Affairs Department, Nigeria Electricity Regulatory Commission, Dr Usman Arabi, on Wednesday.

The statement said that the committee members, who were on oversight visit to the commission, queried the reduction in cash collection, which they claimed was N15bn before privatisation, but has now reduced to about N5bn.

 The statement said the committee members were unhappy at the inability of the Distribution Companies to meter customers and their use of the estimated billing system.  It quoted Abaribe as saying: “Are you sure the privatisation of the power sector is producing the needed result with the under-performance by the new investors.”

It said Abaribe assured NERC of the committee’s readiness to empower the commission to enable it to perform its regulatory functions effectively.  The statement also quoted the acting Chairman of NERC, Dr Anthony Akah, as saying that the commission is doing all it can to ensure that the operators in the power sector value chain play by the rules.

It stated that the strict applications of rules and regulations will help remove obstacles militating against the optimal performance of licensed operators in the sector. He said sanctions had been meted out to erring operators in nine different instances in the last four months.  He said the gesture is an indication of the change in regulatory tactics, even though some of the sanctions were being appealed.

He said, “The operators are hiding behind judicial proceedings to prevent posting of letter of credit and possibility of escrowing their account,” the statement quoted him as saying.  According to the statement, this is frustrating strict compliance with contractual obligations and causing liquidity problems in the sector.

It said Akah assured that some of the DISCOs that initiated the court proceedings were beginning to see the futility of their exercise and might soon withdraw the suits they instituted.  He said the commission, through its regulatory initiative facilitated the increased 40 megawatts by Paras Energy.

The statement said he advised the lawmakers to prevail on their respective state governments to take interest in investing in the power sector.   The statement also quoted him as saying that what was being experienced in Nigeria was not different from developed countries experienced within five years of privatising their power sectors.

He said Nigerians should begin to treat electricity as a product with its own cost of production.

Source: Punch

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