Power Distribution Companies in Nigeria (DISCOS), at the weekend, lamented they incured a huge operational shortfall of about N3 trillion, a development that makes it difficult for them to meet their obligation.
Speaking to Daily Sun in Abuja, the Executive Director, Association of Nigerian Electricity Distributors (ANED), Sunday Oduntan, said that the liquidity crisis was not peculiar to the DisCos but cuts across the entire powervalue chain.
“There is a limit to how much you can invest otherwise you cannot recover it in your tariff. That is what happens. If I need an investment of N20 billion and I am allowed N7 billion, it means that if I spend a penny above that I cannot recover it. The purpose of doing business is cost recovery. Those educated well enough can understand what I mean. This is a heavily regulated industry. You cannot do outside what has been given to you” Oduntan noted.
According to him, the right price for a kilo hour of electricity is N80, but the DisCos are forced to operate at N31.56k national average for residential. This he said, has made it difficult for firms to operate.
“There is nothing that we have not done and there is nothing that we need to do more than what we have done.
“They (authorities) know and I can assure you that the current government is even trying its best to fix the problem which confirms the fact that they know. It is not a hidden thing. Everybody knows. I will be surprised to see anybody in this industry who does not know that there is a huge shortfall which is in excess of N3 trillion now which is making it difficult for the DisCos to make electricity available for the nation. It is a major problem. It is not just us. The liquidity crisis cuts across the entire value chain. Even gas suppliers need to be paid by the generation companies and the generation companies need to be paid for what they produce. The transmission companies need to be paid by what they wheeled,” the Executive Director, disclosed.
He said that the problem is a function of a lot of factors but that it is the responsibility of the regulators to look at the factors including foreign exchange, lending rate, and the cost of production of power.
“They should use that to determine the tariff. But the tariff should be in excess of N80” he said, adding that the discos are forced to charge N31.56k national average for residential.”