Litigations against the tariff approved by the Nigerian Electricity Regulatory Commission (NERC) have been attributed to the stoppage of the implementation of the nation’s Power Road Map put in place by the administration of president Jonathan.
This situation is said to have had profound impact on the power reform project which perhaps would lifted up the power sector to an enviable level by now.
Responding to what went wrong with the reform Shehu Garba, chairman of NERC said, he remembered that as far as 2010, the Federal Government produced what was known ‘Power Road Map’ which was to reform the power sector and so on, with a very clear vision of what is to be done
“I remember as far back 2010 the federal government produced what is known as Power Road Map aimed at reforming the power sector reform and so on, so very clear vision of what is to be done.”
He said that some of the major pitfalls are the litigations against the tariff in 2015, stating further that there was this famous case within the regulatory setting, the civil society group challenged the decision of NERC on tariff, following that, NERC could not do any tariff review for four years.
According to him, obviously without rate review and without any consideration the entire reform was put at risk, that was one major event, because if there are no sufficient revenues in the industry, it means you can’t find the gas, you can’t and the investment, the Discos balance sheet is impaired, all kinds of things happens.
He said right now MAN is in court with the Discos because based on that case the Discos cannot operate the tariff approved by the regulator. If the Discos are unable to collect rates approved by the regulators, obviously they run into problems
The NERC boss stated because of this situation, the Federal Government has started by putting N600billion, N500billions subsiding the industry because the rate could not move, but however stated that the sector cannot work on the basis of subsidies by the Federal Government.
“These are two major things that has affected the reform itself.”
“I remember clearly, that the commission has declared Transitional Electricity Market (TEM). Under TEM everybody would work according to contracts, you have obligations to take the energy, have obligation to generate and obligation to buy the gas, without the money that lubricates the value chain there is the problem. This is the summary of some of the key things that has affected the reform”.
