The electricity Distribution Companies (DisCos) yesterday urged the federal government to respect the different agreements it entered into with the investors in the Nigerian electricity supply industry (NESI).
Following the commencement of the Transition Electricity Market (TEM), the electricity market was expected to be governed by the sanctity of power purchase agreements that the private investors entered into with the government.
Part of the power agreements is the minor and major reviews of the Multi-Year Tariff Order (MYTO), which the Nigerian Electricity Regulatory Commission (NERC) has frozen since 2015.
The Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors (ANED), Sunday Odutan yesterday insisted that “the federal government of Nigeria must respect the sanctity of contracts.”
ANED is the umbrella body of the DisCos.
Odutan said that the DisCos cannot sell electricity below their cost price and attain optimum performance.
In regulating the electricity market, Odutan asked the NERC to be neutral, consistent and strategic.
He noted that the revenue shortfall of the entire power sector has exceeded N1.3trillion.
He advised the federal government to realign the electricity market for the DisCos to perform optimally.
Proffering solution to the power sector liquidity crisis, Odutan asked the government to realign the sector holistically.
The DisCos spokesman said that there must be technical and commercial alignment of the sector because of the interdependence of the three value chain: generation, transmission and distribution.
He called for the streamlining of the value chain to ensure at the transmission arm would have the capacity to transmit what is generated to the distribution sub-sector and the distributors should also have the capacity to transmit same to the consumers.
“There is the need for an alignment of the value chain: technical and commercial alignments. If there is problem with generation, it will affect distribution.
“If there is a problem with transmission it will affect distribution. Performance of one is dependent on the performance of the other. That is why it is called a value chain.
“The problem of the sector is misalignment. They need to align the value chain. There should be commercial and technical alignment.
“Commercial alignment is if you are generating 10,000mw, you must be able to transmit 10,000 megawatts. You must be able to distribute 10,000mw.
“Then the technical alignment if you are buying electricity at this price, you must not be forced to sell below the cost. That is commercial alignment.”
He said that the Transmission Company of Nigeria (TCN) currently lacks the capacity to wheel the generated energy to the DisCos.