The 11 electricity distribution companies (Discos) in Nigeria’s electricity supply industry have claimed that they are currently losing an average of N10 on every kilowatt hour (kwh) of electricity they distribute to homes and offices in their networks.
The Discos also said they have been unable to borrow funds to invest in their networks because of the deficit status of their respective balance sheets.
Speaking in Abuja through their association – the Association of Nigerian Electricity Distributors (ANED), the Discos equally stated they would want the government to legally recognise the current electricity market shortfall as a deferred income which could help them re-engineer their balance sheets to be bankable.
The Executive Director, Advocacy for ANED, Mr. Sunday Oduntan explained that the current shortfall had reached N809.8 billion, and that the Discos have been operating on deficit for a long time now.
“No Disco is making any profit in this sector now. No Disco has less than N10 loss today on power supplied to consumers. We are struggling with cost recovery,” said Oduntan.
He further said the pegging of capital expenditure in the tariff at N20 billion was a challenge to the Discos because they would not be allowed to spend more than that annually on capital projects.
Oduntan explained that with such capital expenditure peg, the Discos would be unable to conclude their metering plans in the sector, as well as expand their network reach.
“Our capital expenditure is capped at N20 billion per annum. What that means is that whatever we spend outside of this in a year, it is our business and not recognised in the tariff for that period.
“Tell me how we will provide meters and transformers and expand our networks. Meter cost money, how can we get money when we cannot borrow because our businesses are not bankable and we are carrying deficits,” he noted.
He further explained: “If you look at the difference as regards tariff, the same quantum of energy which may sell for N10 had by June increased to N18 from December 2015 to June 2016. What that means is that the invoices to us for quantities supplied have increased, and that is why publications by NBET without explanation can be factual but misleading as they have not told Nigerians that costs have increased while the Discos have not increased tariff.”
“We are not clamouring for an increase in tariff but government needs to come in and do something because the shortfall is now N809.8 billion. If the Discos die, the sector will die as well.
“We are all in this together, and we are all in a desperate situation and need help. We will either swim or sink together. We are allowed to sell electricity based on N197/$ which is what is in the tariff. This cannot work,” added Oduntan.