The Sun News

Blame poor planning for failure of 2013 power privatisation –Stakeholder

…Warns against high tariff

From James Ojo, Abuja

Pioneer head of Market Operations of the Transmission Company of Nigeria (TCN), Uzoma Achinanya, yesterday, identified policy summersault in the reform of the power sector as the bane of achieving  stable power in the country as he cautioned against tariff increment without proper research.
Speaking at a stakeholders meeting in Abuja, Achinanya lamented that the jettisoning of projections on capital flow into both generation, distribution and transmission led to liquidity problems, which have aggravated the problems in the energy sector.
According to him, failure to test the market design and generation projections before the 2013 privatisation was like putting the cart before the horse in the whole gamut of power reform.
This, he noted, led to a drastic fall in power generation from about 6,000 megawatts (MW) in 1990 to a little above 3,000MW.
He said that there was a dislocation from the projected energy value and the revenue requirements to guarantee stable power supply before the privatisation exercise and the fixing of the tariff.
Achinanya noted that it was not surprising after a year into privatisation that the companies in all the power supply chain started to record deficits in generation, distribution, leading to liquidity problems.
He said that records showed that there was a glaring disconnect from the projected energy value and revenue requirements as what was generated was far below the projection.
Apart from policy inconsistency, he noted that the prevailing variables were not the same when the power sector was unbundled and the generation and distribution sectors given to private concerns to manage.
Using 2015 as a case study, he said that it was projected that power generation will be in the threshold of 4,500MW, but that generation hovered around 3,000MW between February and December, while expected revenue was about N353 billion, whereas about N237 billion was collected leaving a deficit of 33 per cent.
He added that remittances did not follow any pattern even on monthly basis, while high generation of power sent to consumers only led to losses in investment.
On the current tariff, he cautioned against any increase without a prior study of what to recover, the attendant losses, as failure to do so would lead to energy glut and further deepening of liquidity crisis.
Any increase in tariff, he warned, would lead to sharp increases in energy theft,  revenue losses as consumers will opt for alternative source of energy, with more consumers leaving the grid, while honest consumers will reduce energy consumption.

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