The Federal Government is looking at ending tariff shortfall, averaging N200 billion yearly, in the power sector by the end of the year. Between 2015 and 2020, the shortfall reportedly stood at about N2.4 trillion, averaging N200 billion yearly. The shortfall accrued from suppressed charges for electricity consumption. By implication, Nigerians may, from December this year, be compelled to pay the actual cost of energy consumed.
This comes as the Nigerian Electricity Regulatory Commission (NERC) said emerging challenges, especially insecurity, are already frustrating the sector.
Chairman of NERC, Sanusi Garba, said the inability to fix adequate tariffs led to challenges facing the distribution companies. He added that the development affected the financial viability of the distribution companies.
“A lot of things happened relating to the financial viability of the DisCos, because if tariffs were static and they have inflation and FX issues then distribution companies will have under-recovery of revenue,” he said. Garba admitted that the situation must have affected the companies in raising necessary capital and operating expenses.
According to him, the challenges with the utility are not only about funding but also governance, capacity and other issues.
The challenges are further complicated by the situation in the country. A number of the DisCos are impacted by security challenges and all kinds of things impacting on their capacity, either to deliver service or even to recover their revenue,” Garba said.