Power sector risks collapse over N1.1 trn debt burden

The country’s power sector risks collapsing under a heavy debt burden of N1.1 trillion if nothing is done to deal with the problem. The bad debt situation in the sector is now rising by N30 billion a month with total unpaid liabilities in the sector now standing at N1.1 trillion as against N800 billion that government officials always claim. The challenges faced by the sector was disclosed by operators at a round table on the energy sector organised by the Sahara Group in Lagos yesterday.

Chronic debtors to sector are in the public sector even as the chairman of Sahara Power group, Kola Adesina disclosed that electricity supply to Ikeja cantonment has been restricted to two hours a day by Ikeja Electric because of the debt the military formation is owing the company.
The operators who were unanimous over the debt revelation said drastic steps must be taken by all stakeholders to save the industry from collapse.
Aigbe Olotu, group chief Financial officer of Sahara Group who spoke at the first Sahara Power Roundtable said if action is not taken to deal with the rising liabilities, the electricity sector may collapse, stressing that the government must step in to create the right investment climate that would allow the sector to survive
He said that the Multi Year Tariff Order (MYTO) may be criticised but it was established by law and operators relied on the law to invest believing that it would be respected.
“3-5 years into when the law was made the tariff has significantly fallen below the cost of generating electricity,” Olotu said.
Wale Oluwo, Lagos state commissioner for Energy Resources, said that the stakeholders in the power industry must focus on solution for the industry, adding that the cost of generation is not in tandem with the existing tariff structure.
He advised that states that can achieve cost reflective tariff should be allowed to operate their own electricity system, stating that Nigeria is a federation and because of this all the states cannot be treated the same way. The problem of the sector, he said, is structural and cannot be solved through administrative fiat.
Evacuation of power is now very bad as the average technical and commercial and collection ATC&C loses is about 30 to 40 per cent. He said this is not good enough for the sector. He also called for more investment to be made in the distribution networks so that electricity can get to more people
Usman Gur Mohammed, managing director of Transmission Company of Nigeria (TCN) said that the company is beset by a lot of human and technical problems which his management is trying to resolve.
He said the there is a need for investment in critical infrastructure to make the sector survive.
Meanwhile, the Nigerian Electricity Regulatory Commission, (NERC) has confirmed that a total of 30 companies have now been licenced to participate in procurement of prepaid meters in the Nigerian Electricity Supply Industry (NESI).

NERC has prior to now granted licences to 22 firms, but with additional eight companies obtaining licences, as it confirmed in a statement issued on Thursday, the total number of companies to participate in the procurement and bid process with electricity distribution companies of their choice of prepaid meters now stands at 30 firms.

According to the statement issued by Vivian Mbonu, who heads its media unit, successful bidders from procurement process shall obtain Meter Asset Provider Permit from the Commission after entering into Metering Service Agreement with electricity distribution companies.

The statement said, services to be provided by Meter Asset Providers may among others include financing, procurement, installation, repair and replacement of electricity meters according to the MAP Regulations 2018.

The eight newly approved companies with access to the ‘No Objection’ form, which guarantees access to work with DISCOs for the procurement and installation of the Meter include: – Carlin Concept International Nigeria Limited; Onenation Energy Platform Nigeria Limited; Armese Consulting Limited; CWG Plc; Damtaq Limited; Powerup Projects International Limited; Esinos Resources International Limited; Techadvance Limited.

NERC adds further that intending investors have opportunities to apply for the Commission’s ‘No Objection’ to participate in meter procurement process as it is a continuous exercise.

Industry watchers have expressed deeper worry of inability to meter electricity consumers, with NERC confirming that only 3.36 million consumers out of ‎8 million billed consumers have meters.

Olusola Bello, Lagos & HARRISON EDEH, Abuja

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