Lagos - Power investors have said the current electricity tariff structure is inimical to growth and called for its review.
The investors, who played host to the members of the House Committee on Privatisation and Commercialisation in Lagos, said only an increase in tariff would ensure Return on Investment for them.
According to them, the power assets taken over from the defunct Power Holding Company of Nigeria are not bankable with the current tariff being paid for electricity generated and consumed in the country.
The Chief Executive Officer, Egbin Power Plc, Mike Uzoigwe, said since the 1 320-megawatt plant was taken over by private investors on November 1, 2013, it had generated and sent N18.3bn worth of power to the national grid.
He said the amount was discounted to N13.16bn by the market operator based on the interim market rule, although the company’s total expenditure within the period was N13.7bn.
As such, Uzoigwe said the power generation company lost N576m between November 2013 and March 2014.
Despite that, he said only N6.5bn had been paid so far by the market operator.
He, therefore, warned that until the system was made to operate near investors’ invoices’ value, the business would not be bankable and this would not augur well for the industry.
He insisted that the current tariff structure could not support the power investment while adding that it might not make economic sense for investors to continue to do business in such manner.
He said, “Until the system operates near our invoice value, this business is not bankable and this is the worst disaster that can happen to the power industry as it is now.
Similarly, the Managing Director, Eko Electricity Distribution Company, Oladele Amoda, said the privatisation expectations of the investors were not just to meet and exceed all stakeholders’ expectations, but to also have a tariff reset based on actual energy received, ATCC losses, customer numbers and absence of subsidies.
He said the company was working closely with the Nigerian Electricity regulatory Commission to look into the current tariff structure.
According to him, the investors also expect the payment of subsidies in the MYTO II model to make up for the low tariffs.
“We are subsidising some category of customers, which the government promised to pay but up till now, we are not getting it,” he said
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