Electricity Market Row: DisCos Justify Quit Notice, Say Sector Premature with N892 Billion Shortfall


The Distribution Companies (DisCos) have justified their intention to quit the business of selling electricity saying the power sector with over N892 billion shortfall, was not yet mature for the new Eligible Customer regulation that permits large customers to bypass DisCos and buy power from the Generation Companies (GenCos).

The spokesman of the Association of Nigerian Electricity Distributors (ANED), Sunday Oduntan also said the Eligible Customer regulation enacted by NERC some two weeks ago will create a rise in tariff by at least N4 per kilo watt hour (kwh) through a Competition Transition Charge (CTC) on the residential customers who will be left on their networks.

The Bureau of Public Enterprises (BPE) which oversees the operations of the privatised power firms said the DisCos issued a force majeure notice last Monday but rejected it insisting there was no basis for such. The Nigerian Electricity Regulatory Commission (NERC) which regulates power firms also backed BPE saying government was not ready to honour the intent to quit.

Daily Trust however gathered that not all the DisCos consented to the force majeure declaration. Sources privy to the issue this week said Abuja and Kaduna DisCos were among those exempted from the quit notice sent to BPE.

ANED said implementing the CTC was key because the large customers subsidise residential customers and that they contribute an average of 60 per cent to DisCos’ revenues.

Fearing that this will contribute to the already N892 billion electricity market shortfall as at August 2017, the DisCos said, “it will further contribute to the DisCos’ inability to recover the revenues that will enable them to make the capital investment that is critical to injecting efficiency into the supply of electricity to their customers.”

It said although they do not question the legitimacy of the Minister of Power, Works and Housing’s right to declare Eligible Customers, “we believe that the declaration is premature and is inconsistent with the pre-conditions established under the Electric Power Sector Reform Act (EPSRA), 2005.

“In particular, the level of competition envisaged for such declaration, that should be in line with sufficiency of power supply, does not currently exist. Nor has there been an implementation of the CTC that is specified under the Act,” Oduntan said.

Source: IWIN

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