FG Begins Probe into Extension of Discos’ Licences, Says Full Cost-reflective Regime May Raise Unit Cost to N140

•Admits political exigency, empathy holding back planned increase in prices 

•May review franchise areas of distribution companies 

•Nigeria yet to resume power supply to Niger Republic, says Adelabu

Emmanuel Addeh in Abuja

The federal government yesterday said it was investigating the purported extension of the operating licenses of Distribution Companies (Discos) by a previous administration and a former management of the Nigerian Electricity Regulatory Commission (NERC).

The Minister of Power, Adebayo Adelabu, who stated this during an interactive session with energy reporters in Abuja, noted that the federal government had declined to implement the cost-reflective price regime on the basis of political expediency and empathy.

While the licenses were expected to expire and due for renewal by 2023, information from NERC had indicated that it was extended to 2028 without any public hearing or sensitisation.

Adelabu noted that he had never opposed full cost-recovery in the sector, but had always considered the impact on poor and vulnerable Nigerians.

“I said it should have been executed months ago. But for political reasons and for empathy, you cannot impose additional burden on Nigerians.

“We are just talking about petrol subsidy removal, exchange rate is skyrocketing, we are talking about galloping inflation and the hardship that comes with it. So, Mr President is trying to ameliorate the hardship.

“If it must be cost-reflective, it must double. We are at N63 or N73 per kilowatt now, but it can never be less than N130 or N140 if we must implement cost-reflective tariff at the exchange rate of today.

“Because part of the reasons for escalated tariff is the price of gas. It is priced in dollars and today, 75 to 80 per cent generation is still from gas.  Even now, it is even at a concessional price,” he added.

Adelabu also kicked against the wholesale privatisation of the power sector, stating that left to him, he would commercialise the sector.

According to him, most countries of the world that have used power to drive their economy did not hand it over  to the private sector, but recognised the inputs of professionals in the power sector through collaboration.

Stressing that it’s mostly government that can drive the kind of long-term investment in the power infrastructure, Adelabu explained that the federal government may review the franchises of the Discos so that they can better manage their jurisdictions.

“If we had done commercialisation at that time, it would have been better than what we have now. But we can still work around it. Today, government owns 40 per cent of the Discos.

“I have talked about territorial coverage for the Discos. I feel that some of their territories are too large for them to effectively monitor. So what we can do is to probably do a review around the coverage, creating mini-Discos,” he stated.

He stressed that the government’s new strategy may take the Enugu Disco pattern wherein a mini-Disco was separated from the bigger one. He listed for instance, Ibadan Disco which has Oyo, Ekiti, parts of Ogun, among others as its franchise area, maintaining that it’s difficult to oversee.

According to him, if anything, the state governments, given the new law in the sector can come in through the distribution sector to ensure it is expanded, explaining that he believes in decentralisation of the sector.

Maintaining that government will increase the tariff at the appropriate time, Adelabu noted that there will be lots of sensitisation and communication with the general public before any increase, adding that it must be followed by regular supply.

‘’I don’t have problems about increasing the tariff. My fear is when increased, are you assured of a regular increment in power supply? That’s the issue,’’ he said.

He added that the government was shifting to improving the distribution segment of the Nigerian Electricity Supply Industry (NESI) as part of efforts to boost power supply to homes and businesses.

“What we want to adopt is a bottom-up approach which is delivery focused. The little we generate, are we able to get it to consumers? So we are starting from the customer’s end. People always say there are three segments in the value chain but I see it as a five-segment value chain.

“It is from gas producers to generation plants, to transmission, to distribution, and then to customers. This is because customers have issues that we have to resolve.

“Number one issue is the meter gap that we have to close. If you do not supply meters, you cannot measure and if you cannot measure, you cannot bill. If cannot bill, you cannot collect.

“The collection is too poor for this. Liquidity is a major constraint. And the blood that you need in the system is liquidity,” he added.

Adelabu further stated that Nigeria was awaiting the directive of the Economic of West African Countries (ECOWAS) to restore power to Niger Republic before doing so. The country had recently cut supply to Niger Republic as a result of the unconstitutional takeover of power in that country.

He stressed that the industry also needs to tackle power theft and vandalism of power infrastructure, saying those caught would be made to face the law.

The minister further stated that the government was looking at whether the processes embarked upon before the expiry of Discos’ licenses aligned with the law.

He further disclosed that the 700MW Zungeru Hydropower in Niger State was ready, saying it will come on stream before the end of November, to  add to the existing power capacity.

“I am confirming to you that Zungeru hydropower plant is ready and can generate 700mw of power.

“We will start operating Zungeru probably by the end of this month. The only thing left is just to complete the rest of the evacuation infrastructure so that the entire 700mw being generated can be evacuated into the transmission,” he added.