DISCOs Face N809m Shortfall

DISCOsDISCOs in Nigeria are set for a revenue shortfall of N809m in the electricity market by December.

This was disclosed by the Association of Nigerian Electricity Distributors, ANED, at a news conference on Tuesday.

Executive Director, Research and Advocacy, Sunday Oduntan, said the projected shortfall was based on the non-cost recovery nature of the tariff.

Mr. Oduntan said within the last three years that the sector had been privatised, the DISCOs had been operating at a loss.

He said that the DISCOs recorded a N12.8 billion shortfall from December 2013 to February 2016. This is due to the delay in the implementation of Multi Year Tariff Order (MYTO ll).

Government’s Unfulfilled Promise To DISCOs

The Executive director further stated that government had not fulfilled its commitment to the 2013 agreement with the investors.

According to him, government has promised the investors that there will be cost reflective tariffs from its inception as specified under the Performance Agreement.

“This never happened as customers were politically frozen and collection losses removed in 2015.”

“Sculpting or under-recovery of cost will result in N164bn revenue shortfall, for the period of 2016 through 2018. Delay in reflecting costs means a growing increase in deficits.”

“Government promised an increased access to gas supply, but presently, there is little or no improvement in gas supply. This is due to pipeline vandalism resulting in an average of 50% reduction in generation.”

“It also promised that full loses would be recognised in tariffs but presently real loses are higher. This is due to non-payment of electricity bills by ministries, departments and agencies (MDAs).”

“The generation level to be between 5,000MW and 7,000MW, is now between 2,000MW and 3,000MW. This as a result of gas pipeline and transmission wheeling constraints.

Dangote Assertion Untrue

Meanwhile, ANED boss has refuted the Dangote’s assertion that investors in power sector did not understand the venture before investing.

He said it will be difficult to suggest that investors, who committed over N650bn did so without knowing what they were doing.

“It is fair to state that inefficiencies, corruption and limited information associated with the defunct PHCN are still a challenge to the sector operating under the present privatization arrangement.”

He said in spite of the many challenges in the sector, DISCOs made progress in reducing technical and commercial losses. It has also improved billing system and recruited thousands of skilled personnel.

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