DisCos Lost N931bn In 4 Years – PwC
Electricity distribution companies in the country posted a total loss of N931bn from 2014 to 2017, PwC Nigeria has said.
Partner and Chief Economist, PwC Nigeria, Dr Andrew Nevin, said the Discos had continued to report losses, adding that a minimum estimated revenue of N1tn was required by Discos to break even.
He said the Discos made losses of N105bn in 2014; N150bn in 2015; N259bn in 2016 and N417bn in 2017.
“To revitalise liquidity in Discos, we consider 50 per cent of energy received by Discos is transmitted to industries at a cost-reflective rate of N80/Kwh while other consumer categories maintain the current MYTO tariff charges,” he said at the firm’s Annual Power and Utilities Round-table conference in Lagos on Wednesday.
According to him, at tariff charge of N80/Kwh, Nigeria’s electricity tariff is still below most developed industrialised countries.
Nevin said at N80/Kwh charged to industries, an estimated N400bn would be injected into the power sector.
He said, “The effect of charging industries a tariff of N80/Kwh and supplying 50 per cent of electricity received by Discos to industries 24/7 is an increase in the level of manufacturing GDP from N6.4tn to N13.3tn.
“Discos in Nigeria continue to report losses; hence, they pay only an estimated minimum tax, based on turnover instead of the 30 per cent company income tax, which is higher and would have resulted in significant tax revenues for the government.”
According to Nevin, increasing electricity supply to industries has a direct effect on employment in the manufacturing sector as additional labour will have to be engaged to produce the GDP worth N49.6tn
The Managing Director/Chief Executive Officer, Niger Delta Power Holding Company, Mr Chiedu Ugbo, identified the lack of clarity in tariff regulations as one of the major factors affecting power projects developed and funded through project financing.
He said, “The German government/Siemens deal indicates a failure of private investment in networks in Nigeria.
“The market is seriously challenged by limited transmission coverage, limited load offtake, and revenue shortage due to collection inefficiency, theft and corruption at distribution level and indiscipline in market remittance.”
Ugbo said private investment remained the future power financing in Nigeria in view of the huge capital requirement of the sector.
“However, the government has a role to play to enhance the market with well-coordinated policy as it is currently doing under the Power Sector Recovery Plan,” he added.
He stressed the need to strengthen the Nigerian Electricity Regulatory Commission, saying, “Although NERC exists, operators and prospective investors are of the view that mere presence is not sufficient.
“The quality of regulation is critical. Transparent, fair and accountable regulators that produce credible and predictable regulatory decisions are necessary for creating the certainty around market access, tariffs and revenues that encourage investment.”