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Tariff reversal will worsen N300bn funding gap – Power firms

By on July 21, 2016

Any reversal in electricity tariff will increase the over N300bn funding gap, which operators in the sector are currently grappling with, the power firms have said.

They also alleged that the previous government was fond of playing politics with the supply of electricity as it failed to implement various contractual agreements reached with the power firms.

The Executive Director, Association of National Electricity Distributors, Mr. Sunday Oduntan, told journalists in Abuja on Tuesday that if the court ruling on the reversal of tariff was implemented, the outcome on the sector and the overall economy would be more severe than people imagined.

A Federal High Court in Ikoyi, Lagos recently reversed the 45 per cent increase in electricity tariff by the Nigerian Electricity Regulatory Commission in a landmark judgment. The court declared the increase in tariff as illegal and directed that it should be reversed immediately.

The court held that the implementation of the 45 per cent increase in tariff constituted a violation of its interim order, and awarded N50,000 cost against NERC.

But the Discos and NERC have filed separate appeals against the ruling and are also seeking for a stay of execution of the court judgment.

Oduntan explained that the implementation of the new tariff was meant to commence on November 1, 2013 when the sector was officially privatised, but was delayed till February 1, 2016.

This delay, according to him, has led to a huge funding gap that is in excess of N300bn.

He said, “Part of the agreement then was that the newly privatised industry would be given the appropriate tariff. In the performance agreement that was signed, that tariff was called cost-reflective tariff, which simply means appropriate pricing for the product. But the problem that we have had ever since then is that two and half years down the line, the government has not fulfilled its pledge.”

 

[Punch]