Power: DisCos lament N1t tariff loss

NERC denies tariff increase

ALL the 11 Electricity Distribution Companies (DisCos) in Nigeria are presently grappling with a shortfall of about N1.15 trillion in their tariff projection between 2015 and 2018.
Nigerian Electricity Regulatory Commission (NERC) disclosed this in the 2016-2018 Minor Review of Multi-Year Tariff Order 2015 and Minimum Remittance Order for Year 2019 for Discos.
According to NERC, while Ibadan Electricity Distribution Company suffered the biggest tariff shortfall of N161.88bn, followed by Ikeja Electric (N124.17billion), Benin Electricity Distribution Company (N115.35billion), and Kaduna Disco (N114.54billion), Port Harcourt Disco’s tariff shortfall was put at N104.31billion, and Abuja Disco stood at N102.22billion.
Kano, Enugu, Eko and Jos Discos suffered tariff shortfalls of N97.82billion, N97.64billion, N95.65billion and N88.36billion, respectively while Yola Disco, which was returned to the Federal Government by the core investor in 2015, had the lowest tariff shortfall of N51.63billion.
The report further quotes NERC as saying that all funds retained by the Discos as represented by excess of market (remittance) shortfalls over tariff shortfall are to be recovered as a full liability of the Discos, including applicable interest, in line with the provisions of the Supplementary TEM Order, the Market Rules and respective industry contracts with the Nigeria Bulk Electricity Trading Plc and the MO.
“All Discos with excess of tariff shortfall over market shortfall shall be compensated accordingly for the difference. All interest payable by Discos on unpaid invoices issued by the NBET and the MO and attributable to tariff shortfall shall be transferred off the balance sheet of the utilities.
“This order reiterates that the responsibility and initiative for revenue collections from all customers including ministries, departments and agencies of states and Federal Government rest with the Discos. Accordingly, this order makes it mandatory for all Discos to meter all the MDAs with appropriate meters of their choice within 60 days from the effective date of this order.
All Discos reserve the right to disconnect any MDAs defaulting in the payment for electricity in line with the Regulation on Connection and Disconnection Procedures for Electricity Services,” it said.
It will be recalled that distribution and generation companies carved out of the defunct Power Holding Company of Nigeria were handed over to private investors on November 1, 2013, following the privatisation of the power sector. But tariff shortfall is computed from the amount of electricity bill, which consumers could not pay and power distributors could not collect from their customers at any time.
Meanwhile, contrary to the rumour making the rounds that Nigerian Electricity Regulatory Commission (NERC) has increased it’s tariff, the commission says it has not  approved any  tariff increase.
General Manager, Public Affairs, NERC, Mr Usman Arabi, in a statement in Abuja said that the commission was still consulting with stakeholders.
He however said that, “the commission in the discharge of its statutory responsibilities enshrined under the Electric Power Sector Reform (EPSR) Act, shall continue to undertake periodic reviews of electricity tariffs in accordance with prevailing tariff methodology.
According to him, “In all instances of such reviews and rule-making, the commission shall widely consult stakeholders and final decision shall be  taken with  due regard of all contributions” .
He said that the commission wished to provide guidance that the minor review implemented by the commission was a retrospective adjustment of the tariff regime released in 2015.
He explained that this was to account for changes in macroeconomic indices for 2016, 2017 and 2018, “thus providing certainty about revenue shortfall that may have arisen due to the differential between tariffs approved by the regulator and actual end-user tariffs.”