The Federal Government stated in its latest report on Nigeria’s Power Sector Recovery Programme and Policy Interventions that power consumers did not pay a total of N2.4tn for the quantum of electricity they consumed between 2015 and 2020.
In the report, the government clarified that the unpaid electricity bills by power consumers in the six years caused an unsustainable financial impediment in the power sector.
It particularly noted that in 2017, for instance, electricity tariffs could not cover the cost, even at zero Aggregate Technical Commercial and Collection losses.
The Federal Executive Council authorized the Power Sector Recovery Programme in March 2017 and made further amendments in 2019 with strategies to phase-out Federal Government support to the electricity market.
Defining the key drivers of the PSRP, the government said, “Revenue deficits (in the sector) were inevitable, thus creating an unsustainable fiscal burden. The total tariff shortfall (2015 – 2020) as of December 2020 is about N2.4tn.
“Significant CAPEX (capital expenditure) required for a turnaround of the industry. Economy stunted by lack of adequate and reliable power.”
It noted that another major driver of the power recovery programme was the World Bank’s commitment to provide funding support to the industry.
The government, however, stated that the PSRP deliverables were to dimension accumulated and future tariff shortfalls and develop public communication on tariffs and the power recovery programme.
The report noted that through the PSRP, there would be an aggressive loss reduction as a strategy of modulating end-user rates, adding that the programme would identify efficient funding sources to cover revenue shortfall and investment.
Nigeria’s power sector has been faced with tough liquidity concerns since the distribution and generation arms of the industry were privatised in November 2013.
Power generators and other market participants, for instance, had often complained about the failure of distribution companies to remit the complete amount required for the smooth operation of the sector.
The Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors, Sunday Oduntan said that the indebtedness of MDAs had been increasing since November 2013.
“All MDAs’ debt is in excess of N90bn and the military is part of that. We came on board in 2013 and since then, how much has been paid by the MDAs?
“There was a time when a former minister of power said they (government) had concluded arrangement on how to settle the debt, but as I speak with you, the bills are still there unpaid. Since privatisation, there have been issues around MDAs debt.”
