Electricity Distribution Company (DisCos) have claimed that since the reduction of electricity tariff for Band A customers in Enugu State they are facing pressure to also reduce their tariff in other states.
A statement by the MD/CEO of Association of Nigerian Electricity Distributors (ANED), Barr. Sunday Oduntan, on Thursday said the reduction by the Enugu State Electricity Regulatory Commission (EERC), was done without adequate coordination with NERC and other market participants, thus raising significant concerns for the stability and liquidity of the Nigerian Electricity Supply Industry (NESI).
Oduntan stated that since the release of the Tariff Order by EERC for Enugu State residents, the Electricity Distribution Companies (Discos) in other states have come under intense pressure and scrutiny to also reduce tariffs, while some customers have taken a position that they will no longer pay their electricity bills until tariffs are reduced.
While stating that DisCos hoped and desired that electricity tariffs at some point should come down, it is not their intention to make life difficult for loyal customers, and they have been aligning with the Federal Government to ensure provision of stable power supply.
“However, the cost reflective tariff is a result of the economic realities of our nation. We note that one of the principles adopted by EERC is to place reliance on the Policy of the Federal Government on electricity subsidies to enable them crash Band A Tariffs. While Discos are not opposed to subsidies in principle, we strongly emphasize that subsidies must be transparently structured and promptly funded.”
He said delayed or unfunded subsidies create cashflow disruptions, undermine market confidence, and deepen the existing liquidity crisis across the electricity value chain.
“In a clear position, the Federal Government through the Honourable Minister of Power, Chief Bayo Adelabu has stated that States slashing power tariff must be ready to pay subsidy, and be accountable for the financial implication. It is already a fact today that the delay in the prompt payment of electricity subsidies has put the generation companies and gas suppliers under severe operational burden due to the almost N5 trillion outstanding to these market participants.”
He said the Nigerian power market, in the short term, remains largely centrally coordinated, especially for Bulk energy purchases, Transmission, and market settlements involving Generation Companies (GenCos) and the Nigerian Bulk Electricity Trading Company (NBET).
