It also revealed that electricity tariffs were raised in
February this year, and was quick to, however, state that the tariff payable by
some customers in the franchise area of one of the distribution companies was
reduced.
This came as power generation companies condemned the Nigerian
Bulk Electricity Trading company, stating that the NBET was failing in its
obligations in terms of payment for power generated by the Gencos.
Speaking at a press briefing in Abuja on the challenges in
the power sector and other issues, the Chairman, NERC, Sanusi Garba, stated
that subsidy on electricity was a policy issue of the Federal Government that
had to be halted.
He said, “The role of the commission is to make a
determination of the rates that consumers should pay. So we strike a balance
between consumers and investors.
“Now subsidy is a policy issue determined by the government.
The government will decide that the rates calculated or agreed by the regulator
may at this time not be passed on to consumers. It has happened many times.
“In the past four, five years the level of subsidy has
gradually been reduced, because you cannot run the electricity market on life
support and say that investors cannot get their return on investment until
government steps in to provide the required funding.”
Garba added, “So that policy decision (stopping electricity
subsidy) is as announced by the Minister of Finance. The subsidies have been,
at one time as high as N600bn a year, and gradually coming down to about N30bn
or so this year.”
On concerns about the rise in electricity tariffs, the NERC
boss stated that the adjustment was made in February this year following some
economic fundamentals considered by the commission.
“What happened on February 1, 2022, is a minor review of
tariff. It is very clear on our website that every six months we will adjust
rates to take care of the foreign exchange component of cost and also
inflation,” he stated.
Garba described the tariff adjustment as absolutely
straightforward, stressing that the distribution companies were meant to inform
their customers of the changes.
On the recent blackouts and repeated collapse of the
national electricity grid, the NERC chairman said the rupturing of gas
pipelines by vandals and routine maintenance works on some power plants
contributed to the instability of the country’s power system.
This was further buttressed by the Federal Ministry of Power
in a statement issued in Abuja the media aide to the power minister, Sanusi
Isa, where it stated that the national grid suffered double system collapse
within two days due to so many factors
“The current energy crisis confronting some key sectors of
the economy also contributed to the problems we are facing now in the power
sector,” the statement read in part.
It added, “We are where we are today also because of the
increasing vandalism of pipelines that also supply gas to the power plants.
“This too is being resolved in collaboration with the
relevant agencies. The NNPC and other gas suppliers are working relentlessly to
restore gas supply for optimum power supply.”
The ministry said the Federal Government was doing
everything possible through the relevant security agencies to stop the vandalism
of pipelines.
“Routine maintenance of power generating plants had also
contributed to the current power outages we are experiencing,” it stated.
The power ministry added, “These challenges do not in any
way indicate that the ongoing rehabilitation of the national grid by the
government is not yielding results.”
This came as the Gencos, through their umbrella body,
Association of Power Generation Companies, declared on Wednesday that the NBET
was failing in its obligations in terms of payments for power supplied to the
grid by Gencos.
The NBET had in a statement on March 13, 2022, stated that
it was making payments to Gencos as and when due and had never defaulted on any
payment cycle to date.
It further claimed that the percentage payment made to
Gencos had continually been on the increase, with the N701.9bn payment
assurance guarantee of government and that this ensured a minimum of 80 per
cent of Gencos invoices for years 2018 and 2019.
NBET had also stated that the second payment guarantee of
N600bn ensured an average of 95 per cent payment of Gencos invoices for 2020.
But the Gencos through APGC kicked against the claims of
NBET on Wednesday, stressing that the bulk trader was giving out false
information.
“As power generation companies, we believe that their (NBET)
claim is devoid of the true picture of the realities of the generation
companies in the Nigeria electricity supply industry and therefore capable of
misleading the numerous consumers and stakeholders who deserve to know the
truth,” APGC stated.
It added, “This is because, a perusal of their response
shows that NBET never said anything about their payment details, from 2015 till
2017.
“We also believe that NBET is deliberately redirecting the
focus from its inability to carry out its obligations which has thrown the
Gencos in a financial quagmire, by focusing its insistence on the payments from
the payment assurance fund.”
The Gencos charged NBET to publish its payments as this
would show the level of indebtedness of the bulk trader to power generators.
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