In a bid to restore efficiency in the power sector to grow the country’s economy, the Federal Government has threatened to sanction the Distribution Companies of Nigeria, DISCOs, on improved quality in power supply, issuing a three-month ultimatum to that effect.
This came as the Nigerian Electricity Regulatory Commission, NERC, directed the DISCOs to finalise and submit their Performance Improvement Plans (PIPs) between 2017 and 2020. On the DISCOs performance, the Minister of Power, Mr. Mamman Saleh, in a statement in Abuja, said before the three-month delay on the take-off of the implementation of tariff measures, the Discos must be willing to supply meters, improve power supply and agree on what is the reasonable tariff for consumers
He said there would only be a rise in tariff when the DISCOs had committed themselves to play their roles effectively, rather than waiting for Nigerians to pay more for electricity. “Tariffs will only be raised as the Distribution Companies (Discos) improve the quality of supply, meter consumers, and agree with consumers on rates. Discos that fail to improve will be sanctioned.” Mamman added that the ministry of power remained supportive of a “service-reflective” tariff system, which he said would be more equitable and would encourage investment in the sector. He said: “The ministry will work with NERC to ensure that improvements happen in the entire Discos network and estimated billing is capped per NERC Order 197/2020. This will eliminate arbitrary billing that Nigerians have raised issues with.
“We are also implementing other key emergency measures to support the NESI (Nigerian Electricity Supply Industry). We are working with the CBN to ensure payments to the generators and gas suppliers through the Payment Assurance Facility (PAF) are expedited to support power supply. “TCN is also creating emergency measures to ensure staff will be available to monitor the grid and perform technical interventions.
“These changes and emergency measures will have an impact on government finances. The Power Sector Recovery (PSRP) Financing Plan is being updated to reflect the changes. The financing plan will help support ongoing discussions with the World Bank on financial support for the sector and the transition away from tariff support as government optimises its resources.”
He explained that the ministry would continue to implement key infrastructure programmes such as the Siemens/Presidential Power Initiative (PPI), continue the transmission rehabilitation and expansion programme in partnership with the World Bank, African Development Bank (AfDB) and other key development partners.
“To support the underserved and citizens without access in this difficult time, the ministry will accelerate programmes with the Rural Electrification Agency (REA) focusing on solar home systems and solar mini-grids that impact the poor. These programmes continue to be supported by the World Bank, African Development Bank, USAID, DFID, and other key development partners. Meanwhile, the Regulatory arm of the power sector, NERC, in its report, stated that the DISCOs have been directed to finalise and submit their Performance Improvement Plans (PIPs). According to the report, “The Commission continued consultations with relevant stakeholders to develop lasting solutions to the gas impasse in the power industry. Furthermore, the Commission continues to execute a number of actionable items identified in its Strategic Plan 2017-2020 to completely resolve the technical and operational challenges in NESI.
“The overall objective of the PIPs is to ensure that utilities invest in projects critical to addressing the technical and operational challenges affecting their operational efficiency. Engagement of consultants to support the Commission in evaluating the PIPs has since commenced.
“The evaluation is expected to appraise the DISCOs’ proposed utilisation of capital and operating expenditure allowances for relevance and cost efficiency, the investments required by DISCOs towards addressing distribution networks bottlenecks and free up part of the stranded generation capacities and address other related constraints inhibiting the flow of energy.”
It added that “During the same period, the Commission approved the 2016–2018 minor review of the Multi-Year Tariff Order (MYTO) 2015 to determine the cost-reflective tariffs, relevant tariff, and market shortfalls and prescribe the minimum remittance thresholds for each DisCo in line with the allowed end-user tariffs payable by customers.”