- Blame shortfall on forex
The Association of Nigerian Electricity Distributors (ANED) has said that the liquidity in the power sector has risen to N809.6 billion.
It blamed the shortfall on the fluctuation of foreign exchange.
At a briefing on Thursday in Abuja, ANED spokesman, Sunday Olurotimi Oduntan explained that the Multiyear Tariff Order (MYTO) 2015 implemented in February benchmarked the foreign exchange rate of a US dollar at N197 to compute the prevailing tariff.
“The major part of the liquidity issue is that foreign exchange keeps fluctuating. As at December 2015, it was N197. By June 2016 it became N293 and now it is N360 at official rate. This is a difference of N163.
“What that means is that the cost of Generation Companies (GenCos) producing energy has increased because they buy the gas in US dollars. Even if we are paying the same amount that was agreed in December 2015, that amount is now giving a lesser percentage of payment,” Oduntan explained.
He further lamented that the DISCOs are losing over N10 for every kilowatt-hour of electricity they supply to customers.
“No DISCO has less than N10 per kilowatt hour losses in its operation. No single DISCO is making profit as at today because we are only struggling to recover our cost,” he stated.
On likely solutions, he urged the Federal Government to ensure gas supply, and work towards selling gas in local currency, naira.
He said, “The IOCs do not want to sell in naira but government should look at way of factoring this thing or getting it around. We buy gas in dollars and they don’t sell at the Forex recognised by MYTO, but we are compelled to still sell electricity by that N197 Forex in MYTO and that is causing the shortfall.
“We are just in a helpless situation that needs help from government. It is not just about the DISCOs alone but the entire value chain because if one dies, the others die too,” the ANED spokesman said.
While also speaking on the recent drop in energy payment published by the Nigerian Bulk Electricity Trading Plc (NBET), he described the report as misleading.
He explained that what the DISCOs paid for monthly energy was unchanged last year, but the value has been affected by Forex.
His words, “Although the cost that comes back to DISCOs is higher, they are still expected to sell at the MYTO price because it has not been reviewed. Cost of energy has gone up, but the tariff remains the same. We are not clamouring for a tariff rise but government needs to intervene because the shortfall in the sector has reached N809.8billion,” Oduntan said.
He said the amount was for revenue that ought to have accrued to the industry but did not.
“They fixed the tariff in December 2015, but in their wisdom they suspended it till February. The month of January that was left out cost the industry N12.8billion. It should have commenced on the 1st of January,” he added.
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