NERC Chairman, Sam Amadi
The Nigerian Electricity Regulatory Commission (NERC) has said that it is working out modalities with the Market Operator to improve the revenue generation drive of the Power Holding Company of Nigeria (PHCN) distribution companies in the new tariff structure.
THISDAY checks in Abuja revealed that while the new Multi Year Tariff Order 2 (MYTO 2) which was introduced by NERC in June granted some level of improvement in monthly revenue generated by PHCN distribution companies, there are still obvious gaps in total revenue collected monthly by the Market Operator for distribution across the electricity supply value chain.
Accordingly, with the existence of MYTO 2, which has cost-reflective components in it, the discos are yet to improve on their revenue collection measures, a situation that suggests a somewhat lackadaisical approach to revenue collection by the companies.
This fair improvement in revenue of the discos, THISDAY investigations reveal, was merely due to increment in electricity tariff and not necessarily from improvements in collection strategies of the discos; NERC however frowns on this situation.
Speaking to THISDAY on the development, the Chairman of NERC, Dr. Sam Amadi, explained that there had been slight improvement in revenue generated and remitted by PHCN discos in the last couple of months since the inception of MYTO 2.
Amadi however did not disclose the current total monthly earnings of the Market Operator from the discos.
He noted that the commission has discovered that the increment was not commensurate with expected revenue collection in view of the failure of marketing departments of the discos to initiate efficient revenue collection strategies.
According to him: “There is a slight improvement from what they previously collected but this is not as we projected. We have discovered that this is because they are not going out to collect revenues accruing to them; their marketing departments are simply not doing enough to collect revenue due to them and this is what we won’t accept.
They have to initiate efficient collection models because even though MYTO 2 is cost-reflective, they still have to ensure that their collection procedures are efficient.
Right now, we are working with the market operator to ensure that their collection rate is improved on; they have to improve and the only way to improve is to initiate proactive tariff collection strategies.”
Former Minister of Power, Prof. Barth Nnaji, had hinted that PHCN would be able to generate about N22.5 billion monthly in the new electricity tariff structure, adding that the amount was an irreducible quantity the company needed to make in order to meet its obligations to primary suppliers, like Shell, Agip, Ibom Power, the National Integrated Power Projects and the Nigerian Gas Company (NGC).