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Gas price, electricity tariff may increase – FG

By BusinessNews Staff on May 17, 2014

The price of gas to power plants in Nigeria may be increased in the nearest future and this may lead to a total review of electricity tariffs across the country, the federal government has said.

It said gas-to-power price might rise from its current $1.5 to $2 mbtu and this may affect the tariffs on electricity.

The Minister of Power, Prof. Chinedu Nebo, disclosed this to the chief executives of power firms in Abuja yesterday at the headquarters of the Nigerian Electricity Regulatory Commission (NERC), during a facility tour.

Nebo’s statement was prompted by complaints made by the power firms that have been contending with huge revenue losses since the sector was privatised.

The minister said: “There are private people who want to do gas too, and they are saying that if they can be assured of even $2 as opposed to $1.5, they will be able to develop their gas and make sure that it get to our Gencos.

“We need to look into all these and when that is done I believe we will now need to review the entire tariff structure so that there will be the requisite amount of money coming in so as to compensate for that increase.”
Electricity generation companies had raised the alarm that the huge revenue loses which they often incur may mar the privatisation of Nigeria’s power sector.

In addition, the federal government disclosed that if need be, it may have to take some good quantity of gas from Nigeria’s dedicated gas volumes for export to augment supplies to gas-powered plants in the country.

Nebo said high-level discussions on the possibility of such tap in had been held, with stakeholders agreeing to the proposal and other measures necessary to ensure stable supply of gas to Nigeria’s existing thermal power plants.

He informed the chief executives of power generation companies, who were at a meeting with NERC, that measures to sustain growth in gas supply to their plants were being worked out, hence the need for tolerance.

“Bear with us as we work through these teething problems and as NERC does everything possible to make sure that you are happy, transmission is happy, distribution is happy and those who are at the receiving end are happy. I also want to assure you that every effort is being made to make sure that you have gas.

“I have been able to hold series of meetings with the Minister of Petroleum Resources and it has come to a point where we said, if need be, we will get some gas from the export portion and everybody has agreed that every measure must be taken to make sure that you have enough gas,” Nebo said.

One of such gas export portions that may be affected is the 678 kilometer West Africa Gas Pipeline (WAGP) which links the existing Escravos-Lagos pipeline at the Nigeria Gas Company’s Itoki natural gas export terminal and proceeds to a beach-head in Lagos.

Nigeria under the WAGP supplies between 200 million standard cubic feet of gas per day (mmscfd) to its neighbouring countries.

On other issues affecting power supply in Nigeria, Nebo stated that the World Bank declined the federal government’s proposal to fund metering of electricity customers in the country on the grounds that the operations of the distribution companies were quite complicated.

He said: “In addition to that, the whole issue of metering is suffocating. There is no doubt about that but unfortunately many Discos actually collected money from customers but meters were not provided and that is why they are being harassed by customers.

“Many people paid, may be hundreds of thousands of people and they never got any meter from the discos. Now we have an estimated shortfall of metering gap of 2.7 million.

“Electricity theft has become an art in Nigeria, people practise it and they practise it so copiously and some even brag about the escapade that they are not paying for the electricity that they are consuming.

“NERC is working on the problem but people are concerned about the funding. We have taken this to international agencies and even World Bank, but it is saying we can fund Gencos, we can fund transmission but we do not want to get involved with Discos.

“So we are looking for alternative means because the metering gap must be met and we are not talking about ordinary meters but meters that are theft proof because some Nigerians have learned how to beat the system no matter what you do,” the minister stated.

Meanwhile, the CEO of Egbin power plant, Mike Uzoigwe, has said that the current revenue profile of the power sector is extremely poor.

Uzoigwe stated that Egbin power plant has continued to record losses since the conclusion of the privatisation in November 2013, he added that this is despite the injection of about N7 billion to ramp up its operations and capacity.

“Our experience since after privatisation has been undesirable. As at the end of last month, our books showed that we are losing revenue to the tune of about N570 million doing business from November 1 to date.
The revenue profile in the electricity industry is very poor and if any further investor will look in, it will give results that may not be desirable for the country,” Uzoigwe told Nebo.

[This Day]

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