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DisCos lament funding gap in electricity sector

By Abimbola Fashakin, Lagos 

The 11 electricity distribution companies (DisCos) under the umbrella of Association of Nigerian Electricity Distributors (ANED) has stated that since 2013, the funding gap in the power sector is now over N300 billion. Spokesman for the association, Mr. Sunday Oduntan, who made this disclosure to newsmen in Abuja on Tuesday implored the Federal Government to create mechanisms to drive further investments into the sector. 

According to him, a fair Multi Year Tariff Order (MYTO) was meant to cushion the impact but has not been cost reflective until the recent one signed in December 2015. 

Oduntan said the MYTO 2.1 was then suspended till February 2016 noting that the privatised companies bore the revenue gap of January when the MYTO was not enforced. 

The spokesman also urged the federal government to strengthen transmission services by doing a proper concession on managing and investing in the Transmission Company of Nigeria (TCN). 

He said the Discos can distribute over 10,000mw but that the transmission infrastructures are inadequate citing instances of poor allocation to Kano Disco.

TCN requires about $7billion to construct a new 10,000mw grid and another $1.2billion to fix the existing grid, Oduntan disclosed. 

Reacting to the recent court judgment reversing the prevailing tariff last week, ANED said the Discos could not get loans from banks prior to the current tariff as the business was deemed not bankable. 

“I enjoin us to look at the issues in the sector. Inappropriate tariff leads to shortfalls and that leads to funding gaps which has risen above N300billion.

“The MYTO 2015 corrects the funding gap but it is spread over 10 years and recovered gradually; if you look at the template, the tariff will go down after the first three years,” Oduntan explained. 

The Nigerian Electricity Regulatory Commission (NERC) last Friday said it has filed for a stay of execution on the 45 per cent average rise in electricity tariff while appealing against the court ruling. 

He admitted that but for vandals’ actions on oil and gas infrastructures

since March this year, industry operators expected a rise in generation to about 6,000 megawatts (mw) from the 5,072mw attained in February, a day after the tariff was enforced.

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