Electricity Tariff Hike: 11 DISCOs React To Senate Directive

Eleven electricity distribution companies (DISCOs) on the platform of Association of Nigerian Electricity Distributors (ANED) have reacted to the Senate directive on the suspension of the new electricity tariff.

The association on Wednesday, February 17, warned that suspending the implementation of the tariff would leave the country in continued darkness, with diminished and no future prospects of growth for the economy.

The group maintained that the new tariff would guarantee adequate investments in the sector, which would ultimately lead to a reduction in tariff in the future.

The executive director, advocacy and research of the association, Sunday Oduntan, also cautioned that the absence of a market priced tariff would create the possibility of performance failure by the operators.

In a statement, Oduntan noted that failure of the sector would result in, among other things, loss of employment and livelihood for approximately 50,000 Nigerians, indirect job losses from factory and other business closures.

The statement reads: “The Senate on Tuesday, February 16, 2016 passed a resolution directing the Nigeria Electricity Regulatory Commission (NERC) to suspend the recently-implemented electricity tariff (MYTO-2015). “However, implementation of this resolution is not without consequences and the following are a few of them.

A market priced tariff is a fundamental requirement under the agreements signed between distribution company (disco) operators in the Nigerian Electricity Supply Industry (NESI) and the Bureau for Public Enterprises (BPE), raising the concern for sanctity of contract. “Such a failure will be at a price that the government can ill-afford in these times of die economic challenges.

A market priced tariff is critical to address decades of under-investment (for instance, the five million metering gap) in the sector. “Worldwide electricity reforms have always been tied to increased investment, resulting in improved production efficiency.

Such investment is predicated on access to capital, which will be jeopardized in the absence of a market priced tariff. “The absence of a market priced tariff will endanger the viability of the entire value-chain of distributors, generators, transmission and gas suppliers, resulting in the failure of the sector.”

Recall that the Senate on Tuesday, February 16, asked the Nigeria Electricity Regulatory Commission (NERC), the ministry of power and electricity distribution companies to immediately suspend the increase in electricity tariff by 40 percent.

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