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Power sector loses N113bn as experts list challenges

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By Prince Okafor

THE nation’s power supply chain has continued to face severe pressures with accumulated debts along with unavailability of Generation, Distribution and Transmission equipment, leading to a loss of N113 billion so far this year.

Data from the Power Advisory Team, Office of the Vice President showed that, on the average, the development stalled the supply of 2,780mw and 3,302mw in the months of January and February, 2019 respectively while the supply of 3,014mw was also stalled in the first 18 days of March, 2019.

A breakdown of the losses showed that a total of N41.4 billion and N44.4 billion were recorded in January and February, 2019 respectively, while N27.5 billion was recorded in the first 18 days of March, 2019.

In an email to Vanguard, the Sector Lead, Distribution Power, Advisory Power Team, Office of the Vice President, Morakinyo Beckley, who attributed the losses to some factors, including lack of a cost reflective tariff in the sector, said: “In 2010, when the Federal Government published the Roadmap for Power Sector Reform, it openly acknowledged that the country’s regulated electricity tariffs were less than 40 percent of the minimum level required for cost-reflectivity.

“In Naira terms, the average levelised end user tariff at the time was N8.5kWh (equivalent to just 5.7 US cents/kWh). Tariffs in Nigeria were also far below the tariffs applicable in all other West African countries.

FG receives kudos for improved power generation

“Due to the lack of a cost reflective tariff, the government has taken several steps to support the sector by providing indirect debt to DISCOs. These include the N213 billion Nigerian Electricity Market Stabilization Facility in 2014, the N701 billion Payment Assurance Guarantee facility from CBN in 2017 to enable NBET (Nigerian Bulk Electricity Trading) meet its statutory role as a credit worthy buyer of grid electricity.

“The Power Sector Recovery Programme proposes a further financial injection by the Federal Government of about N927 billion to happen between 2018 and 2021. This fund will help stabilise the electricity sector pending when the tariffs become market driven.”

The Executive Director, Association of Nigerian Electricity Distributors, ANED, Mr. Sunday Oduntan, had said in an interview with Vanguard that: “There are some challenges that need to be tackled by many stakeholders, especially the Federal Government, the DISCOs and gas suppliers. These include: lack of liquidity that hampers our operations. Another challenge is energy theft which culminates in leakages and losses.

“The vandalism of facilities that occur too often is also a serious problem that leads to huge deficit. No bank would lend you money unless your business is bankable. Let me re-state for emphasis that this liquidity crisis is a major threat to the power sector. The revenue shortfalls adversely affect the ability of the Discos to make capital investments in metering, network expansion, equipment rehabilitation and replacement that are critical for service delivery.”

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