The Federal government has subsidised the generation segment of the power industry with N1.3 trillion in just 18 months.
This, a document of the Ministry of Power sighted by New Telegraph at the weekend showed, came as bickering looms between government and investors in distribution companies over a new policy, which tends to cut down DisCos’ intermediary role in the power value chain.
“In 2018, the Federal government, the ministry’s document read, approved an intervention fund of N700 billion to GenCos. Just recently, another N600 billion was approved for the same purpose,” the document read.
Corroborating the report on power subsidy to GenCos, Minister of Power, Sale Mamman, stated that the funding necessitated the new willing-buyer-willing-seller policy of government.
The policy, he said, tends to whittle down the supply value chains where about 2,000 megawatts (MW) of power is stranded through failure in distribution chain.
“Over 2,000MW of electricity is not being distributed due to the failure of the distribution chain,” he said.
The huge subsidy is an overbearing burden on government.
Mamman added that DisCos owed the GenCos and other agencies in the sector over N1.3 trillion and that their collection and remittances have remained below 30 per cent despite several efforts to make them improve.
The Ministry of Power had, in a statement by Aaron Artimas, Special Adviser (Media and Communications) to the minister, noted that the new electricity distribution policy called “Willing Seller, Willing Buyer” was designed to bypass middlemen and sell power directly to consumers.
Under the differential power distribution policy, electricity will be wheeled directly from generation companies (GenCos) to willing consumers, who are ready to fully settle their bills.
The willing consumers may include community and commercial clusters, industrial areas and hospitality sectors, the statement said.
The power minister added that the policy was designed to save energy loss in the sector and assist GenCos, who have not been getting the full payment for the power generated.
Mamman said the policy had already taken off as a pilot scheme in two states.
The minister revealed that DisCos had not been distributing all the power wheeled to them on the pretext that consumers were not paying for power supplied.
This, he said, necessitated the huge subsidy intervention in the power sector by paying the GenCos for undistributed power.
While calling on Nigerians to be more responsible by paying their electricity bills, the minister assured that government was taking various measures, including completion of on-going power projects, to improve generation and distribution.
He noted that in neighbouring Niger Republic, electricity tariffs were higher, while payments were almost 100 per cent.
The minister also added that as part of efforts to improve power supply to the North, a new 330kva line would be installed for Kano and other cities to balance distribution in the country.
He, however, hinted that with the anticipated improvement in power supply in the country, the increase in electricity tariffs was inevitable, considering the cost of energy generation in Nigeria.
- Media Report