The Federal Government may be the major cause of the problems being faced by the power sector after its privatisation. It has failed in most of the performance agreements signed with those who bought the power firms.
According to the Eko Electricity Distribution Company (EKEDC) Board Chairman, Mr. Charles Momoh, and the Country Director, Energy Market and Rates Consultants, Mrs. Rahila Thomas, the government did not honour the agreements signed during the sector’s privatisation in 2013.
Momoh said while handing over the assets, the government promised that generation would be between 5,000 megawatts (Mw) and 7,500Mw by 2015.
This, he said, has not happened as agreements on improved supply of gas to thermal plants, establishment of cost-reflective tariff and payment of outstanding debts that accrued from unpaid electricity bills of customers, especially ministries, departments and agencies (MDAs), have not been respected.
Mrs. Thomas said the transmission segment of the supply value chain works sub-optimally because of underfunding. She said the Transmission Company of Nigeria (TCN) was allocated N30.3 billion for capital expenditure in the budget contrary to the Multi-Year Tariff Order (MYTO) requirements.
To buttress the huge shortfall in capital expediture allocation, she stated that MYTO requirement for 2016 is N205 billion. For 2017, it is N419 billion and N265 billion for 2018.
She also noted that donors indicated their intention to provide $623 million for the transmission segment but nothing has been done three years after the pledge.
Momoh and Mrs. Thomas spoke when the Senate Committee on Privatisation, led by its Chairman, Senator Ben Bruce, visited Eko Electricity Distribution Company (EKEDC), Lagos.
Eko DisCo Chief Executive Officer Dr Oladele Amoda listed the challenges and achievements of the company, including the huge debt of about N10.7 billion owed by customers, power theft and meter bypassing by customers, among others.
He appealed to the Senators to make a law that would prescribe stringent punishment for offenders involved in vandalisation of equipment, theft and tampering with meters. He urged the lawmakers to include in the 2017 budget appropriation the debts owed by MDAs.
Bruce said the visit became imperative because people were questioning the privatisation process; “some said it was a mistake to have privatised the sector and why there has not been improvement in power. The generation level has not changed from what it used to be before privatisation. So the committee had to go round privatised entities to know the problems.”
The committee chair said it was inexplicable that power output had not improved since the sector was privatised three years ago.
The Federal Government owes the sector N900 billion. Bruce said it would be extremely difficult for the Senate to approve N1 triilion for the government to pay for debts when there was no output to justify such payment.
The Committee promised to meet other DisCos, Appropriation and Budget Committees as well as stakeholders to find lasting solutions to the problems.
The committee said the Senate would, before the end of the year, draft a law against power theft, vandalism of equipment and meter bypassing. It also pledged to appropriate the fund to pay the debts owed the power firms in the 2017 budget, and also meet with the Central Bank, DisCos and the Bureau of Public Enterprises (BPE) to solve the problem of accessing foreign exchange by power companies. (The Nation)