BREAKING NEWS, Power
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The Nigerian government explains to legislators why it is unable to sanction electricity distribution and generation companies over their inefficiencies
| By Anayo Ezugwu | Jun 20, 2016 @ 01:00 GMT |
THE federal government has ruled out sanctioning of the electricity distribution and generation companies as the power supply situation continues to drop. Babatunde Fashola, minister of power, works and housing, said it would be difficult for the government to randomly punish the operational inefficiencies of electricity generation companies, Gencos and distribution companies, Discos, in the country because the government had largely failed to provide them with the right tools to work with.
Fashola, in a statement issued by Timothy Oyedeji, director of press in the ministry of power, told the joint committees of labour, power, and steel development during a public hearing on electricity tariff hike that there were operational challenges the Gencos and Discos contend with and which the government had not addressed.
He said as a responsible government that inherited a legally-backed transaction, which gave majority shareholding to private investors in the Gencos and Discos, it would not act arbitrarily but must follow due process if it wanted to punish their inefficiencies to avoid harmful court cases. The minister, according to the statement, wondered how Discos could be sanctioned when they were not supported to improve on their operations.
The minister explained that the government lacks the moral right to sanction them because many of its agencies still owe huge sums of money for electricity they consumed over the years. He also spoke about the protracted controversy over the recent tariff raise, saying that contrary to insinuations, the new rates were not arrived at arbitrarily because the conditions for its periodic review are specified in the Electricity Power Sector Reform Act 2005.
The minister also asked all concerned stakeholders to consider exploring the content of the Act to identify the provisions for adjustment as the tariff has not been irreversibly fixed. “The processes of determining tariffs are clearly outside the control of government,” Fashola said, adding that with the liquidation of the Power Holding Company of Nigeria, PHCN, the government has become a minority shareholder in the business of power, thus handing over the task of regulation of the sector to the Nigerian Electricity Regulatory Commission, NERC.
The statement noted that he requested for time for the sector to withstand shocks presently being experienced in its transition period, and then asked, “The transition period of 2013 to 2016 is it a long time to wait in a sector that has been badly managed for upward of 60 years?”
He equally insisted that with the introduction of a cost reflective tariff, a lot of gains have been made in regaining the confidence of the market, even though appreciable improvement was yet to be noticed. This, he added would improve the market’s liquidity and attract more investors to leverage on such development.
Similarly, Louis Edozien, permanent secretary in the ministry, explained that a more realistic overview of the country’s power situation was to see it as a national problem that requires all stakeholders to know and play their roles accordingly, rather than engage in blame games. Edozien urged the parliament to support the sector with proactive legislations and over-sight responsibilities. He added that the government has a plan to provide meters to all customers designated as Residence-2 (R-2) and R-3 by the end of next year.
The federal government had last week said it had no plans to review downwards the increase in electricity tariff and that a reversal of tariff will cost the government more than N575 billion.
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