Following the Nigerian Electricity Regulatory Commission (NERC) capped estimated billing Power Distribution Companies (DisCos) are losing N13.9 billion monthly.
The energy distributors have sought realistic indices before the implementation of the Service Reflective Tariff (SRT).
The Managing Director of the Abuja Electricity Distribution Company (AEDC), Engr. Ernest Mupwaya disclosed this on Thursday in Abuja, when he made a presentation on behalf of the DisCos at a public hearing by the House of Representatives Committee on Power.
Mupwaya said there were some outstanding requirements before the SRT could be implemented. One of these he said, “is the removal of Estimated Billing caps. The financial impact of the Capping Order is an average loss of N13.9bn monthly, thereby, undermining or jeopardizing the minimum remittance requirement.”
The new tariff was to be implemented on July 1, 2020 before lawmakers at the National Assembly met with stakeholders in the power sector for its suspension until the first quarter of 2021, citing the economic situation of their constituents.
“DisCos believe in the objectives of the service-reflective tariff – if properly timed and implemented, a tariff increment will drive much needed capital into the NESI,” Mupwaya revealed.
He however said NERC had changed the criteria forming the basis of the tariff several times without giving DisCos enough time to consult with customers despite the COVID-19 issues.
Among the other realistic indices towards the effective implementation of the new tariff is that of the Minimum Remittance order (MRO). The DisCos wanted a realistic MRO required for market discipline and liquidity as against the current MRO for monthly energy supply imposed on them by NERC.
In addition, the DisCos said they want an unencumbered financial balance sheet for access to debt financing of their required Capital Expenditure (CAPEX) and Operational Expenditure (OPEX) investment.
He said the DisCos advocated for reduced exposure to volumetric, grid failure, generation and FOREX risks. Deduction of future energy debt of the MDAs from invoice raised by the Nigerian Bulk Electricity Trading Plc (NBET). “DisCos are yet to be paid N25bn debt already verified by the Office of the Vice President since 2015, even the MDAs’ historical debts are over N98bn,” Mupwaya said.
“NERC ought to acknowledge and plan for the impact of COVID-19 pandemic on DisCos’ revenue and operational performance. DisCos should be made to sign a Service Level Agreement (SLA) with Transmission Company of Nigeria (TCN) to end the energy imbalance and misallocation causing DisCos to lose about N1 billion monthly.
“There is the need to separate the units at TCN to have a separate Independent System Operator (ISO) and a Market Operator (MO),” Mupwaya said.
To further ensure the smooth take off of the new tariff, the DisCos wanted a situation where they would have metered all their 11 kilovolts (KV) and 33kV power lines for proper monitoring. “This is an objective means of measuring energy flows and apportioning responsibility for failure to meet agreed service levels.”