Discos Intensify Efforts For Electricity Tariffs Hike Approval – Politics
There is no respite yet for electricity consumers with Distribution Companies (DisCos) still pushing ahead with their bid for Federal Government’s approval to raise the tariffs.
Last week, the National Electricity Regulatory Commission (NERC) halted the 40 per cent tariff hike planned by the DisCos following an outcry by Nigerians, who are reeling under the effect of petrol subsidy withdrawal.
NERC’s action came after some of the DisCos notified consumers of increased tariffs.
It was learnt yesterday that the DisCos are billed to meet with NERC in Abuja next week.
Senior officials of two DisCos, who confirmed the scheduled meeting, declined to release the agenda.
But it was learnt that tariffs raise is central to the parley.
The NERC will also meet with other power institutions such as the Transmission Company of Nigeria (TCN) and Generating Companies (GenCos).
It was learnt that NERC has scheduled a meeting with all the 11 DisCos and other critical stakeholders in the electricity supply and loop.
NERC will meet on Monday and Tuesday with Managing Directors and top management of DisCos, GenCos and TCN.
On Wednesday and Thursday, it will meet with major electricity consumers, firms, suppliers and service providers, such as suppliers of gas, among others.
How the DisCos can shore up their revenue, especially following a 40 per cent loss, and their inability to meet their performance targets, will also be discussed, it was gathered.
All the DisCos, based on the NERC’s June 2023 data, recorded losses after exceeding their allowed targets for Aggregate Technical, Commercial, and Collection (ATC & C) losses.
The ATC & C losses include technical, commercial and collection inefficiencies in the power distribution process, such as power theft, meter tampering, billing inaccuracies and revenue leakages.
The failure to meet the target comes at a time when the sector was considering an increase in electricity tariffs brought about by macroeconomic conditions.
Sources close to the top management of DisCos that will be attending the meeting confided in The Nation that the issue of tariffs increase will be knotty, but they are ready to really push for its approval.
It was gathered that another option to be mooted will be to have a gradual increment instead of the 40 per cent tariffs increase at once.
This means that the DisCos may settle for increments on pro-rata basis until they finally get to the desired target of 40 per cent.
However, should the proposal be rejected, the DisCos may ask the government for a subsidy in the form of a “relief package” on their equipment importation and other critical operational transactions executed in foreign exchange, especially with the exchange rate unification.
But this may be a difficult option given that in March 2022, the former Minister of Finance, Zainab Ahmed, revealed that the government had ‘quietly’ removed the subsidy on electricity tariff or any buffers it was paying in the sector.
“We have been able to quietly implement subsidy removal in the electricity sector and as we speak, we don’t have subsidies in the electricity sector.
“We did that incrementally over time by carefully adjusting the prices at some levels while holding the lower levels down,” she said at a virtual meeting of African Finance Ministers (AFM) and the International Monetary Fund (IMF) back then.
DisCos have insisted that without increasing tariffs, their continued survival in business will be threatened.
