Reviewed electricity tariff fails to capture N1.7trn shortfall ― GenCos

The Electricity Generation Companies(GenCos), on Monday, faulted the reviewed tariff, scheduled to take effect 1st April, 2020, saying that the Nigerian Electricity Regulatory Commission (NERC) has not captured all the ‘changes’ in the relevant macroeconomic variables and available generation capacity in updating the operating MYTO-2015 in line with the provisions of the MYTO Methodology.

They stated that the Commission did not indicate how the N1.7trillion shortfalls would be financed as there are no provisions for such in the 2019 or 2020 budget.

The Executive Secretary of the umbrella body of the GenCos, Association of Electricity Generation Companies (APGC), Barr. Joy Ogaji, stated this in a reaction to the review, issued on Monday, in Abuja.

“We are concerned about the financing of the shortfalls, given that there is no provision in What is the PSRP financing initiative? What is not clear is who will take charge of the financing plan. Do these plans and facilities even exist? If so, what are the terms under which they were created, if not in existence, right now, who is working to create them and when would they be ready?”

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They queried that according to the 2020 minor review, GenCos are only allowed to receive 36 per cent of their revenue requirement while DisCos will receive 100 per cent if they fulfil their obligations.

“Why this difference? What’s the justification behind GenCos getting 36 per cent of their revenue requirement, while the DisCos receives a 100 per cent if it just manages to make the minimum remittance which from our investigation Discos have not adhered to?

“The regulator needs to address the issue of previous failed reviews and how this review will be different in terms of effectiveness/ implementation.”

Also, the GenCos sought more explanation from NERC on the methodology for the determination of the minimum remittance for the DisCos.

“For instance, PHEDC has a 21 per cent minimum remittance level, how are the GenCos made whole for a likely 79 per cent shortfall through the tariff shortfall for the period. What happens in the unlikely event that DisCos pay more than the minimum remittance level?” the statement read.

The GenCos opined that the review objectives were more prescriptive as the review was not clear in terms of how NERC hopes to achieve the relevant objectives.

It added that: “Optimal delivery cannot thrive in view of indiscriminate redefinitions of standard processes already defined in the ruling documents like the Electricity Act, Grid Code, Market Rules and all other approved Operating Procedures. Investment in Generation Capacity should, in all intents and purposes, attract equivalent returns for the CapEx and OpEx.”

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