THE Nigerian Electricity Regulatory Commission (NERC) has expressed optimism that Nigeria would witness better supply of electricity as international companies would now be encouraged to sell to the domestic market because of increase in the prices of the product in December 2014.
The price of gas for power generation this December went up. The price approved by the Federal Ministry of Petroleum and NERC is now $2.50 per MMBTU (Million Metric British Thermal Units) effective this month. Gas transportation cost also increased to $.80.
In an interview at the weekend, NERC Chairman, Dr. Sam Amadi, said the price of gas would be a turning point for power generation and supply in the country. He admitted that transmission is still a bottleneck and particularly called on the Federal Ministry of Power not to interfere in the running of the Transmission Company of Nigeria.
Amadi said: “I think it (transmission) is a simple bottleneck. The Ministry of Power should remove its hands from the transmission company, simply by allowing it have a board with clear directives.
“With the new gas price, we expect some increase in power production. Already, some of the gas suppliers have made commitments but we are certain that this new gas price will help in the longer term because people will, on that basis, begin to invest in gas infrastructure knowing that the price is good and will be indexed.
“It has the potential of enhancing the capacity of gas to power going forward. It will unlock the sector for more investment and in the interim, ensure that we have more gas to power our generators. But ultimately, the value is down the road when these investments have been made and matured.”
He also spoke on some of the challenges associated with the privatized electricity industry, dismissing fears about power supply dipping further.
Amadi said: “From the empirical evidence we have, it is actually not true that electricity has done worse since take over. Some of the operators have done fairly well. Ibadan Disco is fairly doing well in terms of grappling with the challenges. Surprisingly, from indicators, Yola Disco that used to be the whipping boy has done well. It is also noteworthy that both discos are owned by the same people and they are doing well. They are doing more than most Discos financially.
“If you look at metering now, Ibadan is doing well but Benin claims to be the best. Our evidence does not support that claim. Eko has tried, Ikeja has surprisingly fallen short of standard. Before now, it used to do well, but the new guys there are not doing well in terms of dealing with consumers and market settlement and so there are mixed grill of discos performances.”
According to him, “Port Harcourt Disco is trying to set up good forum offices and IT-based processes, they started late, though. Abuja is not doing well and needs to work harder even financially in terms of market obligations. Surprisingly, Enugu has the best business plan, and they come out better than everybody in terms of financials. During the acquisitions, they made the right calculations as to what would happen in the market and so didn’t make any commitment to improvements in the first year. They said in their business plan that they will not make any commitment to improvement in the first year and didn’t commit to loss reduction in the first year.”
On the amended Multi Year Tariff Order (MYTO 2.1), the NERC chief said tariff increase was deliberately approved for only commercial consumers to encourage the utilities to invest heavily in improving service delivery, noting calls for significant improvement in supply to residential consumers.
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