Wrong tariff behinds N1tr electricity market deficit – ANED

The Association of Nigerian Electricity Distributors (ANED) has said wrong tariff setting since power sector privatisation in 2013 is responsible for the over N1 trillion operational deficit in the electricity market.

The Director of Research and Advocacy, Mr Sunday Oduntan during a briefing in Abuja on Wednesday, said the 11 electricity Distribution Companies (DisCos) constituting ANED cannot recover their operational costs at present due to the tariff deficiency.

He said the rise of the foreign exchange rate from N159 captured in the Multi Year Tariff Order (MYTO) 2015 to over N300 since 2016 worsened the liquidity crisis.

He said, “If I am buying energy at from the Generation Companies (GenCos) and I am only allowed to sell at N31, then it means I can’t recover my cost. The regulator, Nigerian Electricity Regulatory Commission (NERC) is the only one that can review the tariff.”

Oduntan noted that the liquidity shortfall of over N1 trillion was created because of government’s failure to N68 provide a cost reflective tariff they promised immediately 18 power assets were privatised in November 2013.

He also reacted to calls by DisCos on the removal of ‘capacity charges’ from the monthly invoices they get from GenCos through the Nigerian Bulk Electricity Trading Plc (NBET) saying it was higher than the energy they give to customers.