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DISCOs Demands 200% Electricity Tariff Hike

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DISCOs Demands 200% Electricity Tariff Hike

electricity-tariff-increase-discos

By Ebitonye Akpodigha

Nigerians may have to be getting ready to pay more for electricity they consume, barely eight months they were earlier forced to do so by the government.

This is because power firms in the country are appealing to the Federal Government to approve another increase in electricity tariff by 200 percent.

They last increment done was by 45 percent, though there have been a slight improvement in electricity supply in some parts of the country. However, most consumers are yet to be metred by the power firms.

The power distribution companies fondly called DISCOs have written a proposal to the government, asking for the go-ahead to charge electricity consumers in Nigeria an average energy charge of N105 per kilowatt-hour from the current approved rate of 22.8KWH.

According to Punch, the DISCOs attributed their latest push for tariff increase to high inflation rate in the country, scarcity of foreign exchange, devaluation of the naira and the huge debts being owed them.

Already, they have hinted the Nigerian Electricity Regulatory Commission (NERC) about the proposal but no action had been taken on it yet.

Chief Executive Officer, Association of Nigerian Electricity Distributors, an umbrella body for the DISCOs, Mr Azu Obiaya, confirmed the latest agitation for tariff increase, in an interview with our correspondent, stressing that it was important to raise the tariff in order to remain in business and serve the people well.

Mr Obiaya said, “To review the tariff, we will be looking at an average rate of N70 per kilowatt-hour for residential consumers. But some Discos will like to have the rate as high as N105/kWh.”

Each Disco has a fixed energy charge payable by its customers. The highest charge, according to documents obtained by our correspondent from NERC for the year 2016, is N32.26/KWH and this is payable by R2 consumers under the Jos Electricity Distribution Company.

The lowest energy charge of N15.83/KWH is payable by R2 customers who get power from Ikeja Electricity Distribution Company.

A further analysis shows that the average energy charge for all the 11 Discos is N22.8/KWH.

But the Discos were said not to be comfortable with the current rate, as they argued that it was not cost reflective and was hampering the required expansion of infrastructure as well as the smooth flow of operations.

Mr Obiaya, who spoke to our correspondent on the sidelines of a power dialogue in Abuja on Thursday, said the debts owed power distribution companies by private homes, businesses and government ministries, departments and agencies post-privatisation amounted to N568bn.

He also stated that one reason many Discos had not metered their customers was due to the huge debts owed them, as well as the tariff issue.

This, he said, had hampered the operations of the different Discos, a development that had made it difficult for the companies to meet the funds remittances required of them by the Market Operator.

Mr Obiaya said, “Discos are experiencing revenue shortfall on a monthly basis of N38bn. As of June 2016, the MDAs owed the Discos N53bn post-privatisation.

“The books of the Discos are so bad that they have no chance anymore to access finance. These books do not reflect the cash flow that is necessary for them to be taken seriously by any lender.”

A senior official at NERC told our correspondent that although the Discos had been calling for an upward review in tariff, the regulator had not considered their demand.

“The minor review of tariff is ongoing at present but NERC has yet to consider their plea for such increase in tariff, although the economic fundamentals in Nigeria have seriously changed and are now so high,” the official said.

When contacted, the National Secretary, National Electricity Consumers Advocacy Network, Mr Obong Eko, stated that NECAN would never support such move.

He described the move as the peak of insensitivity to the flight of Nigerian masses.

He said, “They’ve been flying the kite for some time now because the last time tariff review was done was when the exchange rate for one United States dollar was about N190. But now, one dollar is close to N500; and the price of gas in the international market has gone up too.

“Despite all these, it will still be so unreasonable to come out to announce an increase in tariff now that Nigerians are going through severe suffering. Are they aware that people are dying of hunger? We can never support such move and we will resist it.”

http://punchng.com/power-firms-demand-200-increase-tariff/

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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Economy

Oil Prices Crash as New COVID Variant Sparks Fears

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Future of Oil

By Adedapo Adesanya

Oil prices crashed more than 12 per cent on Friday as a new COVID-19 strain sparked fears about a demand slowdown just as supply increases.

As a result, the Brent crude plunged by 11.6 per cent or $9.50 to settle at $72.72 per barrel, while the West Texas Intermediate (WTI) crude declined by 13.1 per cent or $10.24 to sell for $68.15 per barrel.

The discovery of a new COVID-19 variant in Southern Africa is already dampening economic growth and triggering another demand slump.

The World Health Organization (WHO) warned of the new COVID variant detected in South Africa, stating that it could be more resistant to vaccines, thanks to its mutations. But the WHO has said further investigation was needed.

The variant, called B.1.1.529, is coming at a time when COVID cases are surging around the world ahead of the holiday season, with the WHO reporting hot spots in all regions and particularly in Europe.

The B.1.1.529 variant contains multiple mutations associated with increased antibody resistance, which may reduce the effectiveness of vaccines, along with mutations that generally make it more contagious.

Market analysts noted that prices did not crash because of President Joe Biden’s announcement of the release of 50 million barrels from the Strategic Petroleum Reserves (SPR), which has not even happened yet.

On Tuesday, Mr Biden of the United States announced plans to release its reserves as part of a global effort by energy-consuming nations to calm 2021′s rapid rise in fuel prices.

India, China, Japan, South Korea and the U.K. will also release some of their reserves to cool the market, which the latest development might have done.

Following this, the Organisation of the Petroleum Exporting Countries and allies (OPEC+) might still have a say in this, with the group’s December 2 meeting potentially resulting in a reduction in production targets for 2022.

The latest occurrence vindicates Saudi Arabia, OPEC’s largest producer which had warned that COVID-19 adds an unknown element to the market and that the alliance should not be too hasty in production ramp-ups or the market would suffer.

Amid this, oil production in the US continues to increase as drilling activity continues to pick up.

The US oil rig count rose this week to 467—a 6-rig increase and a 226 rig increase since this time last year.

The total rig count is now at 569—a figure that is 249 up from this time last year. Active rigs are still hundreds less than the 790 active rigs that were drilling in the pre-COVID world.

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Economy

Sanwo-Olu Slams FG for High Cost of Cooking Gas

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Sanwo-Olu Cost of Cooking Gas

By Modupe Gbadeyanka

**Moves to Ramp up Supply, Crash Price

Governor Babajide Sanwo-Olu of Lagos State has slammed the federal government for being behind the high cost of cooking gas in the country.

Speaking on Thursday at the commissioning of a 40 metric tons Liquefied Petroleum Gas (LPG) refill plant in the Ikorodu area of the state, he attributed the rising price of gas to the introduction of 7.5 per cent VAT and foreign exchange (FX) crisis, a statement posted on the Facebook page of the state government disclosed.

According to him, these issues caused the spike in the price of the product, saying this was “unacceptable” in the face of the high cost of living.

However, he assured that this may soon be a thing of the past as his administration has taken a huge step to ramp up supply and make the product available to residents at cheaper rates.

The new plant in Ikorodu is operated by the state-owned energy firm, Ibile Oil and Gas Corporation (IOGC), and it is the fourth delivered by the corporation. Three other refill plants of varying capacities were built in the Amuwo Odofin, Alimosho and Iponri areas of the state.

The Governor disclosed that his administration decided to establish the plants to cut down the use of dirty fuels responsible for carbon emission and air pollution.

According to him, the energy project was initiated to key into the nation’s ambitious goal to develop the natural gas industry and encourage domestic use of safe cooking gas.

In Lagos, less than 30 per cent of households use gas for cooking. As an alternative to kerosene and charcoal, LPG is a clean-burning fuel that supports smoke-free indoor and outdoor cooking.

Mr Sanwo-Olu said the inclusion of gas into the state’s energy mix was critical to the continuous prosperity of Lagos, stressing that the project would not only transform the State into a gas economy and stimulate commercial growth but also enhance the quality of life by reducing carbon footprint in the environment.

The target, the Governor said, is to increase the supply of cooking gas in local communities, thereby raising domestic LPG usage from the current 25 per cent to about 80 per cent before the end of 2023.

He said: “The gas plant being commissioned today reflects the desire of our administration to align with the global action to reduce carbon emission and address the climate change challenge. One of the measures, which this gas plant will support, is promoting increased adoption of LGP for domestic use in Lagos.

“Our vision is to transit the State into a gas economy and ensure an energy mix that provides different fuelling options for residents with the introduction of Gas-for-Transport and Gas-to-Power projects. Expanding the domestic usage of LPG is critical to the continuous prosperity of Lagos and the attainment of our administration’s desire to transform the State into a 21st-century economy.”

Mr Sanwo-Olu said the increment in LPG price puts the nation at the risk of reversing all gains achieved from awareness of the advantages of using LPG for domestic cooking.

The Governor urged the federal government to reverse the trend in order to make the commodity affordable, while also increasing the availability of safe cooking gas in the country.

He said: “Not only are we excited with our modest intervention by Lagos in the LPG market, but it is also only when we reduce the cost of basic commodities such as cooking gas that the true dividends of democracy can be felt by the people.

“We have done a lot of advocacy for people to appreciate the benefit that comes with the use of gas for domestic cooking, such as reduction in carbon footprint, and improved quality of life. If we have made this great effort, the least the government can do is not to make the commodity unaffordable for the populace.”

The Commissioner for Energy and Mineral Resources, Mr Olalere Odusote, said the plant was built with the highest safety standards, noting that the siting of the facility was deliberate to serve a large number of the populace.

He said the state had the plan to expand the gas facility to 20 units which would be spread across all divisions.

Managing Director of IOGC, Ms Doyin Akinyanju, said the gas plants developed by the corporation had the capacity to supply 20,000 homes within the radius of operation, adding that jobs were created for young people in the supply chain through the use of purpose-built vehicles for door-to-door delivery in neighbourhoods.

She said: “Nigeria has an abundant gas deposit that needs to be rapidly developed. Lagos also is blessed with two known offshore fields – Aje and Ogo – in Badagry with large gas deposits. IOGC is taking steps to develop a bulk offtake facility that will ensure gas security in Lagos, as well as provide a competitive pricing advantage.

“We will continue our sensitisation and awareness campaign in the neighbourhoods where we are located to take Lagosians away from the use of dirty fuels like firewood, charcoal, kerosene to Gas for cooking. Today, we start a new journey with cooking gas by creating a market that will make it safely accessible.”

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Economy

Our Post-paid Customers Owe N115bn—JED Cries Out

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Jos Electricity Distribution Company JED

By Adedapo Adesanya

The Jos Electricity Distribution Company (JED) has said that post-paid customers across its franchise states are indebted to the company to the tune of N115 billion.

This was disclosed by the Managing Director of the company, Mr Hashim Bakori, who explained that the debt owed was different from the cost of energy losses as a result of energy theft.

He said this was discovered after 16 months of hard work after resuming office with his team as the new management of JED.

Mr Bakori disclosed this in Jos during the launch of the company’s 5-years Corporate Strategic Plan to kick start a new goal to be achieved by the organisation.

‘If nothing is done to bridge the gap, a lot will go wrong and that is why we are launching the Corporate Strategic Plan and by the time we are done, people will start seeing the improvement of energy supply across our franchise states.

“We have consulted reputable companies in the world to come and partner with us in moving the company forward.

“From today, you will see a very new Jos DisCo,” he said.

Mr Bakori, however, pointed out that despite the several efforts put in by the new management of JED, vandals and energy thieves still remain a challenge to the company.

“Despite these efforts, the company is currently bedevilled by some man-made challenges. These challenges range from vandalism and theft of our installations, energy theft to customers huge indebtedness to the company.

“In 2021 alone, vandals and thieves have torched about 200 distribution transformers, armoured cables, copper earth wires, transformer oil, feeder pillar copper bars, several spans of aluminium conductors, line insulators etc,” he said.

Headquartered in Jos, Plateau State, the company operates one of the longest distribution networks in the country. It caters to over 400,000 customers in the franchise regions of Plateau, Gombe, Bauchi and Benue States.

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