World Bank Says Poor Electricity Supply Costs Nigeria N10trn Yearly
*** NERC Outlines Additional Guidelines For Discos
The irregular and most times unavaliable electricity supply in Nigeria for business and homes takes a toll on the economy.
According to the World Bank over N10 trillion, are lost yearly to this ugly trend.
The Bank in a new report, noted that transition from a publicly-owned to largely privately-owned power market, which began in 2013, did not bring the expected outcomes.
“The sector is under severe stress,” it said, adding that the causes for the stress were interlinked and the result of key stakeholders falling short of their expected contributions for achieving sector turnaround. The report said this had led to a lack of trust between key stakeholders and among the general public with respect to power sector improvement. It said a credible reform process would require an integrated approach of resolving regulatory and policy failures, and establishing a credible and fiscally sustainable financing plan by the Federal Government to ensure full funding for tariff shortfalls, among other measures. The World Bank described the power sector, particularly the distribution segment, as “operationally inefficient with high losses”. It said, “Power sector recovery is critical for the Federal Government of Nigeria’s response to the COVID-19 challenges.
Meanwhile the Nigerian Electricity Regulatory Commission has outlined guidelines which power distributors must adhere to when purchasing additional generation capacity that will lead to higher tariffs payable by power users. According to the commission, the tariff for such additional generation capacity would be higher than the prevailing wholesale tariff from the general power pool. It disclosed this in a document entitled ‘Guidelines on Distribution Franchising in the Nigerian Electricity Supply Industry,’ with reference NERC/GL/1/2020.
It said, “A Disco shall hold prior customer consultation as a condition for the procurement of additional generation capacity where the cost is higher than the prevailing wholesale tariff from the power pool. “Under such a condition, the commission shall review the procurement for prudence as a condition for allowing the pass-through cost to consumers in the franchised area.”
The NERC added, “Where applicable, the commission may conduct a public hearing for the determination of any supplementary charge to consumers.” It was gathered that some power distributors now supply electricity at higher tariffs to selected locations based on arrangements with such areas. Also, it was learnt that the Discos procure additional generation capacity in order to meet the demand of customers in the select locations.
