Today marks the sixth year since the federal government under the former President Goodluck Jonathan formally handed over 18 power utility firms to the investors in the private sector. However, the tell-tale signs of poor power supply, unstable operations have remained.
Since November 1, 2013 when Nigerians including the assets buyers thought things would transform quickly, the power sector has yet to see some stability.
Government handed over 60 per cent control of 10 Distribution Companies (DisCos) and concessioned six Generation Companies (GenCos) initially after receiving $3 billion from the private investors. Transaction for Kaduna DisCo was completed in 2014.
It left the Transmission Company of Nigeria (TCN) under a under a four year management contract by Manitoba Hydro International Nigeria Limited (MHINL). However, it came under local administration since 2016.
The transaction supervised by the Bureau for public Enterprises (BPE) designed Conditions Precedent (CP) especially on the need for DisCos to reduce the Aggregate Technical, Commercial and Collection (ATC&C) losses and for the GenCos to rehabilitate turbines and raise the actual generation capacity which was around 4,500 megawatts (MW) then.
The industry regulator, Nigerian Electricity Regulatory Commission (NERC) pegged the Capital Expenditure (CAPEX), Operational Expenditure (OPEX) along with the ATC&C for the DisCos in the Multi Year Tariff Order (MYTO) to ensure significant investments are made on metering, reducing estimated billing among others.
NERC started the Interim Market rule that moved to the Transition Electricity Market (TEM) since 2015 when all contracts are expected to be paid by 100 percent. That has not happened owing to several factors.
From July this year, the Market Operator (MO) rolled out sanctions that compelled the DisCos to start paying 100% for ancillary services. NERC followed suit in October by giving eight DisCos 60 days to defend their default in the minimum payment required for energy traded.
But operators and industry watchers have blamed NERC for such actions since it did not implement about six MYTO tariff review since June 2016. The private firms at various occasions said their demand for cost reflective tariff has not been met and there is not practical terms to cushion the over N1.3 trillion shortfall in the electricity market.
Although government through the Central Bank of Nigeria (CBN) has injected about N1.7trn into the sector, operators insist that it was a loan which is deducted at source monthly at 11% interest rate despite the liquidity challenges.
