The shortfall in the revenue of power generation and distribution firms has risen to N478bn from November 2013 when the unbundled firms from the defunct Power Holding Company of Nigeria were handed over to private investors.
This was disclosed on Wednesday by the Chief Executive Officer, Association of Nigerian Electricity Distributors, Mr. Azu Obiaya, in Lagos.
He said the sector had a revenue shortfall of about N290bn as of December 2014, as a result of incorrect data obtained from those in charge of the industry prior to privatisation.
This, according to him, was partly addressed by the N213bn Central Bank of Nigeria’s loan facility, repayable over 10 years with interest.
Obiaya said, “The amount represents N202.5bn for the shortfall since handover and the remainder for legacy debts prior to takeover, leaving a shortfall of about N85bn. So far, only N65bn (of the intervention fund) has been disbursed.
“The tariff has not been cost-reflective. So, all the costs associated with operating the business are not captured. That is the shortfall we are talking about.”
Obiaya noted that the Transitional Electricity Market officially commenced on February 1, 2015, adding that the Discos were supposed to pay market bills in full, even though cost-reflective tariffs were not in place.
He explained, “From January to the end of October, 2015, the new additional sector shortfall would be around N265bn, i.e. N478bn from takeover to date.
“If there is no immediate tariff review, the sector will continue to have a deficit of N20bn per month. The shortfall is being felt by gas suppliers, generating companies, transmission and distribution companies.”
The ANED CEO also stated that the annual capital expenditure approved for the power firms in the country was grossly inadequate to meet the expected improvement in power supply.
Obiaya said the nation’s power sector had suffered years of low investment prior to the privatisation of the defunct PHCN.
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