DisCos mull force majeure, as electricity tariff shortfalls hit N460bn

…..NDPHC says more power plants underway
The Association of Nigerian Electricity Distributors (ANED) has disclosed that the current revenue shortfalls that have accumulated from the inability of the Nigerian Electricity Regulatory Commission (NERC) to allow the 11 electricity distribution companies (DisCos) in the country’s power sector to have cost reflective tariffs have now shot up to N460 billion, thus burdening the operations of the Discos.

ANED stated this at a power sector workshop in Abuja, adding that the heavy financial shortfalls were impacting on the operations of the Discos such that they may be forced to declare a force majeure.

According to documents presented at the workshop, the failure of the NERC to review about three consecutive sets of electricity tariffs between January 2015 and December 2016 resulted in the N460 billion shortfalls.

Responding to this development and a question on why the Discos have rather opted to continue to operate in the sector instead of declaring a force majeure and cutting short their losses, the Executive Director, Research and Advocacy of ANED, Mr. Sunday Oduntan, said: “We are not ruling that out, it is an option.

But, is that the best way out? The best way out is for the government to do the right thing. The problem of the sector is liquidity, and there is no cost reflective tariff to the Discos.”

In another development, the Niger Delta Power Holding Company (NDPHC) has said that more power plants are underway and the next stage was to mobilise the contractors to site.

The company which is in charge of the projects under the Nigeria Integrated Power Projects (NIPP) has secured procurement approval for the power projects from the Bureau of Public Procurement (BPP). Its Chief Executive Officer, Mr. Chiedu Ugbo disclosed this to reporters during the 20th Power Sector Stakeholders’ meeting in Owerri.

He said: “More power plants are coming like the ExxonMobil power plant and a number of other plants being conceived along that corridor.

We have received all the approvals we needed from government including the Bureau of Public Procurement so the next stage now will be to mobilize the contractors to site and we are going to do that a few days from now. So that they will go back to site.”

The Nigerian Electricity Regulatory Commission was empowered under the Electric Power Sector Reform Act 2005 to license persons engaged in electricity generation, transmission and distribution among many other activities.

Condition 39 (2) of the License Terms and Conditions of the license issued to distribution licensees provides that electricity supply customers should be effected with an operational meter being installed.

Furthermore, Condition 39 (6) stipulates that licensees shall be responsible for installing electrical energy meters at its own expense and shall be the owner of all installed metering equipment.

According to the Commissioner, Consumer Affairs, NERC, Dr. Moses Arigu, “majority of electricity customers are unmetered and are therefore billed based on an estimate of energy consumed rather actual consumption.

The estimated billing practices often referred to as “crazy billing” is regarded by most consumers as arbitrary, subjective and non-scientific and this has consequently resulted in customer dissatisfaction, apathy and public outcry and increasing incidence of electricity theft”.

“The Commission, having appraised the current challenges in providing adequate meters in the electricity industry and its consequent impact of the financial viability of the market, is proposing a Regulation for the licensing of Meter Services Providers with responsibility to finance, procure, install and maintain electricity meters and monthly payments over the technical life of the asset.

This is expected to fast track the metering of all electricity customers in NESI over the next three years,” he said.