TARIFF REVERSAL: Nigerians should prepare for total blackout if ... —Discos

Following directives by the Senate on the suspension of increment of electricity tariff, the umbrella body of the 11 electricity distribution companies (discos), Association of Nigerian Electricity Distributors (ANED), on Thursday warned that this may result to outright blackouts.

It warned that if the implementation of the new tariff is suspended, Nigerians may continue to witness blackouts which would no doubt impact on the growth of the economy.

This was contained in a statement issued in Abuja by the Executive Director, Advocacy and Research of the association, Mr. Sunday Oduntan.

According to him, the absence of a market priced tariff would create the possibility of performance failure by the operators.

 The distribution companies further explained that  the new tariff would guarantee adequate investments in the sector, which would ultimately lead to a reduction in tariff in the future.

The statement reads in part;“The senate on Tuesday, February 16, 2016 passed a resolution directing the Nigeria Electricity Regulatory Commission (NERC) to suspend the recently-implemented electricity tariff (MYTO-2015).

“However, implementation of this resolution is not without consequences and the following are a few of them. A market priced tariff is a fundamental requirement under the agreements signed between distribution company (disco) operators in the Nigerian Electricity Supply Industry (NESI) and the Bureau for Public Enterprises (BPE), raising the concern for sanctity of contract.

“Such a failure will be at a price that the government can ill-afford in these times of die economic challenges.”

Oduntan, who noted that failure of the sector would result in, among other things, loss of employment and livelihood for approximately 50,000 Nigerians, indirect job losses from factory and other business closures, possibly in the millions, stressed how this would discourage further investments in the development of gas reserves and production for local consumption.

“A market priced tariff is critical to address decades of under-investment (for instance, the five million metering gap) in the sector.

“Worldwide electricity reforms have always been tied to increased investment, resulting in improved production efficiency. Such investment is predicated on access to capital, which will be jeopardised in the absence of a market priced tariff.

“The absence of a market priced tariff will endanger the viability of the entire value-chain of distributors, generators, transmission and gas suppliers, resulting in the failure of the sector,” he further said.

Source:Tribune