N701bn Intervention Fund May Worsen Discos’ Revenue Shortfalls –ANED

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Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors (ANED), Sunday Oduntan, has stated that the Federal Government’s N701 billion power intervention fund could worsen revenue shortfalls bedevilling the power industry.

Speaking in Lagos recently with newsmen, Oduntan said  that though the fund would solve N300 billion energy supply liabilities, rehabilitate and replace faulty or old turbines and pay for the supply of gas (for the thermal generating plants), it is merely a partial solution to the liquidity challenges of the sector.
He said the fund, “holds the potential for exacerbating the revenue shortfalls the market is currently suffering.”
Acknowledging that the fund’s approval was a welcome development, Oduntan said, “as commendable as this intervention is, we believe it is a partial solution to the liquidity challenges of the sector,  more so as it holds the potential for exacerbating the revenue shortfalls the market is currently suffering from.
“While an increase in electricity supply is the desired objective of everyone, such an increase without the requisite full recovery of cost via the appropriate pricing of power means a resultant worsening of the market revenue gap.”
Besides, he said considering that the approved intervention is not expected to be a subsidy to the market, the assumption is that the proposed funding would eventually be recovered from the customers of electricity Distribution Companies (Discos). For such recovery to occur, he said the Transmission Company of Nigeria (TCN) needs to have the required capacity to wheel the additional power being generated.

He said: “Funding the transmission network is therefore imperative for the proposed Federal Government intervention to work.  Increased generation without commensurate wheeling capacity arising from a stable and robust transmission grid will result in stranded capacity and significant lost revenues.”

Source: Nigeria Today

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