Power Sector And Other Related News Stories For Thursday January 18th 2024
How the Electricity Act 2023 is Reshaping DisCos
Nigeria’s electricity sector has long grappled with challenges ranging from erratic power supply to financial sustainability. Some of the challenges faced by the Distribution Companies (DisCos) include insufficient energy supply from the national grid, old and obsolete network, poorly trained manpower, low meter penetration, poor customer database, absence of investments due to poor revenue, inadequate tariffs and the problem of huge Aggregate Technical, Commercial and Collection (ATC&C) losses.
In response to these issues, the government passed the Electricity Act 2023 (the Act) with the aim of revolutionising the sector by introducing competition and private investment. This landmark legislation has already begun reshaping the business landscape for the DisCos, but it comes with its share of challenges.
One of the most significant changes ushered in by the act is the introduction of competition within the sector. In the past, DisCos operated within relatively monopolistic environments, serving specific geographical regions. However, the act now encourages new entrants to participate in electricity generation, transmission and distribution, thus fostering competition and driving efficiency.
Nigeria Decides to Continue Subsidy Payment on Electricity Until Economy Improves
The Nigerian Electricity Regulatory Commission (NERC) on Wednesday said that the federal government has decided to continue to pay the shortfall in electricity tariffs until the economy begins to improve.
Speaking during an engagement with journalists in Abuja, the Chairman of NERC, Mr. Sanusi Garba, disclosed that a new Multi Year Tariff Order (MYTO) 2024 has now been issued each electricity Distribution Company (Disco), with government ready to offset any deficit arising from the new tariff.
The order issued to the Discos showed that for instance, while Ibadan Disco (IBEDC) pegged its tariff at N118, NERC approved N62.50. The government will pay the difference, the document showed.
For Abuja Disco, NERC approved an “allowed tariff” of N63.24, whereas the distribution company applied for N151.07.
In the same vein, while Benin Disco requested a tariff of N277, NERC approved N60.10, after acknowledging a cost-reflective amount of N126, leaving a deficit of N65.90 to be paid by government on every kilowatt hour (Kwh) consumed by customers under that franchise.
Federal Gov’t to Pay N1.6trn Electricity Subsidy as Discos Unveil New Tariffs
The Nigerian Electricity Regulatory Commission (NERC) has approved new electricity tariffs for the 11 distribution companies in the country, effective from January 2024.
He said that the commission remained committed to working with the states in such a manner that the existing public utilities were nurtured to provide services to Nigerians and were utilised for what they were intended for.
On metering, the chairman said that the commission had identified that the Electricity Distribution Companies had challenges with finances to meter their customers.
He said that the rate of metering had been adversely impacted by the inability of DisCos to raise the required capital from the banks.
“To reduce the rate of estimated billing, the commission created a framework under which the distribution companies can raise some amount of money to meter customers. So we decided that from the market revenues, we set aside a fixed amount that is dedicated to the provision of metering.
“We are not saying that the money from the market on a monthly basis is the money to buy a meter. It is a potential lender to raise a pathway to pay whatever loan DisCos are going to get to provide meters,” he said.
No More N89/Kw: Ikeja Electric, Other Discos Announce New Electricity Tariff, FG Approves Increase
The Federal Government of Nigeria through the Nigerian Electricity R egulatory Commission (NERC), has approved the upward review of electricity tariffs. Sanusi Garba, NERC chairman, disclosed this while speaking with journalists after the Federal Executive Council in Nigeria in Abuja on Wednesday, January 18, 2024.
He explained that the new tariff aligns with the Multi-Year Tariff Order (MYTO), which took effect from January 1, 2024.
The Nation reports that the NERC chairman also revealed that the government will absorb some of the cost from the increase. His words: “Any time the government takes a decision on subsidy, we will take it into consideration in our next tariff. “In other words, even if there is an upward review of the cost of electricity, the government will be absorbing the increase for as long as it can.”
Speaking further, Garba noted that the cost of a kilowatt of electricity differs from one Electricity Distribution Company (DisCo) to another. He revealed that non-maximum demand (MD) customers of the Abuja Electricity Distribution Company (AEDC) band will retain the N68.20 per kilowatt tariff.
50% Nigerians Have No Access to Electricity —Mele Kyari
Chief Executive Officer of the Nigeria National Petroleum Company, NNPC, Limited, Mr. Mele Kyari, yesterday, noted that for Nigeria to prosper and develop, it must bridge the energy gap.
Speaking at the Faculty of Science of the Obafemi Awolowo University in Ile-Ife, Osun State, during the 2024 Faculty Lecture titled ‘Energy Security, Sustainability and Profitability in Nigeria: Challenges and Opportunity’, he stated that 50 per cent of Nigerians have no access to electricity.
According to him, another 75 per cent of the population have no access to clean cooking energy, stressing that stakeholders must strive to harness the country’s potential to ensure that it prospers.
His words: “Energy, indeed, is everything! It is a key concern for poor rural communities that trek long distances to gather biomass for domestic cooking, as well as advanced societies that rely on multiple sources of energy to satisfy domestic, transportation, and industrial needs.
“Seventy-five per cent of Nigeria’s population have no access to clean cooking energy, and 50 per cent have no access to electricity. For these people, the government must provide to bridge the energy gap, as a form of security for prosperity, before looking at the issue of sustainability.”
MOFI Regains Control of Electricity Assets
The Ministry of Finance Incorporated (MOFI) has resumed direct control of the Federal Government’s 40 per cent shareholding in the 11 electricity distribution companies (DisCos) and other energy sector holdings.
Dr. Armstrong Takang, MOFI’s Managing Director, made this known in a statement .
The decision, he said, marked a significant departure from the previous arrangement where the Bureau of Public Enterprises (BPE) managed these shares.
Takang noted that MOFI’s direct involvement signalled a renewed commitment to improving operating efficiency within the DisCos.
By asserting its ownership rights, the MOFI, he said, “aims to streamline processes, implement best corporate governance practices, and ultimately unlock the full potential of these electricity assets”.
This, they believe, aligns with President Bola Tinubu’s growth agenda for a thriving, resilient Nigeria.
In 2012, MOFI granted a Power of Attorney (PoA) to the BPE, enabling them to handle the share sale in the electricity sector privatisation process.
Stakeholders Call for Better Use of Electricity Subsidy Fund
The staggering 700 billion naira spent in 2023 to subsidise electricity has prompted stakeholders to advocate the exploration of alternative uses of the resources currently allocated to electricity tariff subsidies.
The Minister of Power had recently, during his working tour of power facilities in Nigeria to the Ibadan Electricity Distribution Company (IBEDC), said the federal government had spent N700 billion to subsidise electricity last year.
He said the government continues to subsidise electricity as current charges are not cost-reflective.
However, stakeholders have emphasised that sustaining electricity subsidies is not viable. They rather called for subsidising generation as it ensures the full realisation of economic costs associated with making electricity accessible to consumers.
Speaking with The Guardian, Executive Director of PowerUp Nigeria, Adetayo Adegbemle, said despite the N2 trillion subsidies paid since 2015, there has been minimal private sector investment in the sector.