The Chairman, Egbin Power Plc, Mr. Kola Adesina, has warned that electricity tariff will go up if the number of customers within the networks of the distribution companies reduces on the back of the recent declaration of eligible customers.
The Minister of Power, Works and Housing, Mr. Babatunde Fashola, on May 15, 2017, declared that four categories of eligible power consumers were permitted to purchase electricity directly from the generation companies other than the Discos.
But Adesina, at a policy dialogue on the power sector organised by the Lagos Chamber Commerce and Industry, highlighted the possible implication of such a policy for the power sector.
He said, “When you create eligible customers, what you are saying is that industrial and commercial users who are strong and capable enough to stand on their own to directly negotiate with the sellers of electricity can start to do so.
“The moment you reduce the number of eligible customers in the current portfolio of distribution companies, tariff will go up because in the computation of the tariff, part of what was used was the number of customers that are currently being supplied. So, let’s have a total stakeholder analysis regarding the relevant publics; and how will any of these policies impact on each of the relevant publics in the sector.”
The Egbin chairman said the cost of gas for power generation should be relatively low considering the vast natural gas resources in the country.
He noted, “The most significant component of costing electricity production is gas. Nigeria has a comparative advantage in gas production. Invariably, the cost of gas in the parameters being used for pricing electricity should be relatively low, as to be able to have a pass-through finally in the tariff.
“If you don’t benefit from the comparative advantage you have over gas, then there is no way you can help Nigeria industrialise quickly. So if we really want this nation to grow and be competitive, we must start with gas. Whatever policy is coming up with regards to gas, it has direct implication on generation, transmission and distribution.”
According to the Nigerian Electricity Regulatory Commission, the first category of eligible customers comprises end-users whose consumption is not less than two megawatts-hour/hour and connected to a metered 11kV or 33kV delivery point on the distribution network and subject to a distribution use of system agreement for the delivery of electrical energy.
The next category of eligible customers are those connected to a metered 132kV or 330kV delivery point on the transmission network under a transmission use of system agreement for connection and delivery of energy.
The third category consists of those with consumption in excess of two megawatts-hour/hour on monthly basis and connected directly to a metered 33kV delivery point on the transmission network under a transmission use of system agreement.
The last category comprises customers whose minimum consumption is more than two megawatts-hour/hour over a period of one month and directly connected to the metering facility of a generation company, and has entered into a bilateral agreement for the construction and operation of a distribution line with the distribution licensee licensed to operate in the location.
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