Page 5 - AfrElec Week 19

AfrElec COMMENTARY AfrElec
electricity distribution companies, in terms of the inability of customers to pay their bills and the resultant reduction in revenue collections.
“This can affect the continuous availability of increased and improved power to residential customers if not managed,” Osibodu said.
She called for the government to help discos and other power companies during the current COVID-10 pandemic. Abuja could do this by providing a moratorium for repayments of gov- ernment loans and removing the 30% import duty on electricity meters. The government could also pass on the lower price of gas into fixed power tariffs.
Debt levels
Discos have been identified as the weakest link in the Nigerian power sector, as they have extremely low levels of bill collection. This affects their own revenues and limits the ability of NBET to pay for power supplies from the country’s generators.
For example, bill payment rates rarely climb above 50%. Eko Electricity Distribution Com- pany (EKEDC) recorded a remittance efficiency rate of 50.03% in the third quarter of 2019, the highest in the country. Meanwhile, The Jos and Kaduna discos posted rates of 19%.
Thishighlevelofdebtisseenasamajorbrake on reform privatisation efforts in the country.
Debts are everywhere in the power sec- tor. In January discos failed to pay a total of NGN37.22bn ($95.4bn) for electricity sold to them by NBET in that month.
Meanwhile, the Association of Nigerian Elec- tricity Distributors (ANED) has claimed that the federal government owes the discos NGN1.728 trillion ($4.43bn).
The future
The Nigerian government has ambitious plans to privatise various parts of the power sector and to move to a cost-reflective tariff by 2021. The gov- ernment also aims to cap tariff shortfalls, which are used in subsidy calculations, to NGN280bn ($718bn) in 2020.
However, this could be affected by the COVID-10 pandemic. The crisis has already led to the national regulator postponing the expected April tariff increase by three months.
The Nigerian Electricity Regulatory Com- mission (NERC) has admitted that the pandemic has had a significant impact on the power sector.
For example, there is now a shortage of imported components to manufacture meters to supply to customers under the Meter Asset Provider (MAP) Regulations.
Another COVID-19 change is that the gov- ernment plans to provide basic levels of free elec- tricity to all domestic customers as part of the government’s efforts alleviate the economic and social impact of the COVID-19 lockdown.
However, this free power is only expected to increase debt levels throughout the power sector. Nigeria is notable in Africa for its tiny grid capacity of only 4,000-5,000 MW compared to
itspopulationandGDP.
Indeed, unreliable power is a major brake on
economic expansion, prompting the hope in government that reform and privatisation will lead to better use of the country’s gas riches.
However, without making real inroads into debt levels and improving metering and bill pay- ment discipline, reform efforts will continue to be bogged down and potential investors scared away.™
There is now
a shortage
of imported components to manufacture meters for supply to customers under the Meter Asset Provider (MAP) Regulations
Week 19 14•May•2020 w w w . N E W S B A S E . c o m
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