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How Power Supply Fails To Improve 10 Years After Privatization

Published by Fakinlede Tope John on January 2nd, 2024.

How Power Supply Fails To Improve 10 Years After Privatization

started on July 1, 2023, the market revenue shortfall increased to about N600 billion to further compound the liquidity challenge facing the sector. NERC said a review of the Multi-Year Tariff Order, MYTO, in July would have raised the average tariff from N68/kWh to N110/kWh.

NERC quarterly reports showed that in the first nine months of 2023, the DisCos collected N782.56 billion or 73.58 percent of the N1.063 trillion billed to customers, leaving N280.98 billion uncollected.

2024 outlook: FG targets distribution network expansion

With over 13,000 Megawatts of installed power generation capacity and 7,100MW transmission capacity, the Minister of Power, Chief Adebayo Adelabu has said priorities would now shift to improving the distribution segment of the Nigerian Electricity Supply Industry, NESI, as part of the effort to boost power supply to homes and businesses.

He said the government would work hard to bridge the seven million metering gap in the industry to boost liquidity, explaining that after many years of failing to improve power supply, it was for the government to change tact and put in place policies that specifically target the distribution segment.

He stated that the policy change would include a complete review of the structure of the electricity distribution companies with the size of the franchise area, capitalization and tenure of licenses in focus.

In the New Year also, the 700MW Zungeru Hydro in Niger State is expected to commence operations, further boosting the national grid supply.

The tariff adjustment that has been frozen in the past six months is expected to take effect early in 2024, as it was difficult to identify where the government would get the N1.6 trillion subsidies needed to keep it frozen.

Speaking to Vanguard, the President, Nigerian Economic Society, NES, Professor Adeola Adenikinju said the government must lead the charge to close the metering gap in the sector, pointing out that all customers needed to be provided with electricity meters.

“In terms of electricity, I think the government has to see how we can reduce the losses in the sector so that we don’t pass the losses to consumers. The issue will be how to ensure that more Nigerians have access to meters so that they can pay the actual cost of energy they consume. Then how do ensure that electricity distribution companies, DisCos, make the necessary investment to expand and modernize the network. Once we do that then, I will support that the tariff should go up.

“The reality is that in the rural areas where people use decentralised electricity that is provided through solar, they are paying above N100kWh. So if the villagers are paying then why shouldn’t those in the urban areas pay the market price? If we don’t pay the market price, it will affect supply and then we will all go back to using generators which are more expensive than grid electricity”, he added.