The year 2017 begins with the power sector carrying over its critical challenges of liquidity, low metering, and most of all, poor electricity supply. Daily Trust projects likely power sector outcomes in the fresh year.
Tariff review: Electricity price may rise
The year begins with an on-going tariff review procedure that glaringly points to a rise in the price of electricity shortly. In February 2016, the Nigerian Electricity Regulatory Commission (NERC) ordered the 11 Distribution Company (DisCo) to increase the price of electricity per kilowatt hour (kwh) by over 60 per cent through the Multi Year Tariff Order (MYTO) 2015 to cater to the actual cost of producing and supplying power.
The Daily Trust reports that NERC kick-started the minor review of MYTO 2015 last December after it notified the public to send their inputs within 21 days. Given a rising inflation figure, foreign exchange rate and the low power generation indices, analysts say tariff could rise to over N30 per kwh in many DisCos for residential customers. The review process without hitch could last for two to three months and may be ready for implementation by February.
DisCos hopeful on MDAs debts payment
A positive outlook for the sector operators this year is the commitment of President Muhammadu Buhari to the payment of backlog electricity debts for the federal ministries, departments and agencies (MDAs). The Association of Nigerian Electricity Distributors (ANED) puts the debt at over N120billion in December. President Buhari who presented the 2017 Budget proposal last month said there was provision to pay for the old debts this year. The DisCo operators have been commending the president on this since.
It is also expected that with the NERC order in mid-2016 directing DisCos to meter all MDAs, accumulating new debts by them may become difficult across the DisCos that have complied. This would mean more revenue for the DisCos to operate this year.
Sector groans under N803bn shortfall
The power sector carried over a shortfall of N803billion from December 2016. The figure represents interests on loans from the Central Bank of Nigeria (CBN); a N12billion funding gap created from the suspension of the present tariff in January 2016, legacy and current debts owed for gas supply to the Generation Companies (GenCos) and the MDAs debts across the three tiers of government.
Spokesman of ANED, Mr. Sunday Oduntan in a Daily Trust interview last month recommended that the federal government could either introduce subsidy in the sector to address this illiquidity, give two to three year moratorium on interest payments for the Nigeria Electricity Market Support Fund I (NEMSF I) until when the sector becomes buoyant.
Oduntan who said the DisCos presently are not bankable because of the deficit in trading electricity said government should give a certified guarantee on the debts for DisCos and GenCos to serve as a backup instrument for them to get loans from banks.
The ANED spokesman also said government should quickly make the price of buying gas to be in Naira instead of dollar for the GenCos. He said the forex issue has hindered consistent gas supply to generate more power.
Electricity generation rises above 5,000mw
In February 2016, the national grid briefly hit 5,000mw but went down flat to lower than 2,000mw. It started rising to 3,800mw and 4,000mw in the last period of the year.
Experts have however projected that if government sustains the peace terms with militants and contain the oil and gas infrastructure vandalism, power supply could rise above the 5,000mw projected in the MYTO 2015 which formed a basis for the electricity price hike in 2016. This is because more gas will be available for the 23 thermal power generation plants to operate at full capacity and supported by the three hydropower plants.
The TCN had targeted 6,000mw evacuation capacity by December 2016. Although it was not clear if that was attained with its some completed projects, daily generation statistics have shown that TCN can now wheel 5,500mw successfully to the DisCos.
Lingering appointments of agencies heads
The sector may have one of its lingering challenges solved in the year. Several agencies including NERC, National Rural Electrification Agency (NREA), and the Transmission Company of Nigeria (TCN) were left without substantive heads. It is expected that NERC, the sector regulator which has no board since December 2015 may get its team in the first quarter of 2017; so also for NREA and TCN.
The Federal Government will also be shopping to replace the Director General of the National Power Training Institute of Nigeria (NAPTIN), Engr. Reuben Okeke who leaves office soon.
More customers to have meters
The meter roll out capacity last year was observed not to be impressive. This is because out of the about one million expected meter installation from the 11 DisCos, less than 200,000 meters were installed, industry statistics for 2016 revealed. However, the DisCos will be adding to that capacity this year; Abuja DisCo flagged off its mass metering scheme a fortnight ago and promises to deploy 120,000 meters every year.
Daily Trust
