Fashola: Tariff Increase, Debt Clearance Won’t Solve Power Sector Financial Problems

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  • Kaduna Electric rolls out 50,000 meters, Sokoto spends N600m on transformers

Chineme Okafor in Abuja and Mohammed Aminu un Sokoto

The Minister of Power, Works and Housing, Mr. Babatunde Fashola, yesterday said of all the challenges confronting Nigeria’s electricity supply market, chronic illiquidity was still top on the list.

Fashola also said increasing electricity tariffs of consumers and demanding for clearance of debts owed the electricity distribution companies (Discos) alone will not solve the sector’s financial problems.

He said prompt and maximum collection of revenues from consumers would go a long way in addressing the financial problems.

He said this at the monthly power sector stakeholders meeting in Sokoto State, where the governor of the state, Aminu Tambuwal disclosed that the state had in the last one year spent about N600 million to procure and deploy electricity transformers to its towns addressed villages.

The meeting equally provided an opportunity for Kaduna Disco to commission 50,000 consumer meters it procured to be deployed to homes and offices in Sokoto State.

Fashola stated that the inability of the 11 Discos to take enough revenue from electricity consumers in the country, and reduce their collection losses were hugely impacting on the sector’s monthly financial outlook. He thus asked that the Discos improve on their deployment of meters to consumers in their networks.

Speaking Fashola also said the country’s current foreign exchange (forex) regime was affecting the operations of the sector. He however explained that such financial challenges offer operators in the sector the chance to creatively find solutions instead of looking for easy ways out.
He said the deployment of meters to consumers would ensure accurate measurements of electricity supplied and subsequent collection of revenues.

The minister equally asked that operators in the sector begin to look inwards to get equipment they need to operate from local manufacturers instead of relying on importation which he said places immense pressure on the country’s foreign reserves.

“There are opportunities that these problems present. Problems must not define us. The Illiquidity problem manifest in diverse forms: the inability of the distribution companies to collect, the inability of the distribution companies to reduce their losses, the way some subscribers use electricity that is not metered. It manifest in the volatile foreign exchange market that is making it quite challenging for businesses and the debt tolls of government agencies which we are working hard to resolve.

“Let me however make it known to you that we will pay all the verified and payable debt, but debt repayment and tariff adjustment alone will not solve the liquidity problem, maximum and optimum collection of bill is another critical leg in reducing the Illiquidity in the power sector and this is where the metering process is very critical,” said Fashola.

Similarly, Tambuwal said from the N600 million spent by his government, 172 transformers have so far been procured and deployed. He also explained that the state was working hard to ensure that 60MVA transformers procured with the fund is energised by the Transmission Company of Nigeria (TCN ), as well as getting a 330kVa line from Birnin Kebbi to improve power supply to the state.
On the meters deployed by Kaduna Disco, he said it would go a long way to reduce the frequent quarrel over electricity charges between the Disco and consumers in the state.

The Chairman of Kaduna Electric, Yusuf Abubakar, had earlier said in his opening remarks that the reforms in the power sector now makes it obvious that electricity supplied to consumers must be paid for. He said anything short of this would mean that the sector is operating at a loss with tariff shortfalls.

Abubakar equally disclose that the Disco has signed two agreements with a local meter manufacturer and a Turkey based transformer manufacturing firm.

Also, in a communiqué that was read shortly after the meeting by the Managing Director of Kaduna Electric, Garuba Haruna, it was disclosed that an average of 3166 megawatts (MW) of electricity was currently unavailable to the grid due to gas shortages from pipeline vandalism.

Haruna however stated that the Nigerian National Petroleum Corporation (NNPC) informed stakeholders that there was a promising outlook on gas supply to the sector, with the completion of repairs of the Escravos Lagos Pipeline System (ELPS) by mid-November 2016, and incremental supply through new sources which include, the Oredo 2 station of the Nigerian Petroleum Development Company (NPDC), Utorogu NAG-2, Odidi, Giga gas and Total Exploration and Production Nigeria (TEPNG). He added that the Niger Delta Power Holding Company (NDPHC) disclosed that it has completed the Alaoji to Ikot Ekpene 330kV Direct Circuit (DC) transmission line, following the resolution of the community issues in Itu and Oronta.

According to him, the line is due to be energised following its quality assessment by the Nigerian Electricity Management Services Agency (NEMSA), and the commissioning of the Ikot Ekpene switching station by the end of October 2016.
He said this transmission line was critical to the improvement of the reliability of the country’s grid.