Electricity: New investors plan tariff hike, $1.8bn capital injection

Strong indications have emerged that investors in the recently privatized power sector may be forced to raise electricity tariff to reflect the cost of their huge investments.
According to Daily Sun  the move was part of the survival strategies of the investors who are reacting to the challenges ahead of the industry including huge capital investment needed to boost generation and transmission infrastructure.

The new private sector investors who bought the electricity distribution companies, DISCos, according to BPE are to inject a total of $1.8 billion into the operations of the companies. It was not clear, however, if the investors have so far paid this amount to effect the upward review of the electricity tariff to reflect the cost of generating and distributing electricity.
Though, Chairman of the Nigerian Electricity Regulatory Commission (NERC) Dr. Sam Amadi, had noted that the investors are in the business to make profit, they are bound to comply and adhere strictly to the rules authorising them to operate in Nigeria.
Amadi who spoke in Abuja recently when he hosted Energy Correspondents to a one-day seminar emphasised that NERC had from the beginning declared clearly the rules of the business to all investors before they invested. The idea, he explained was to ensure their investment is protected as well as address the concerns of the electricity consumers.
NERC, he said is the government’s regulatory agency with the responsibility to ensure that the rights of consumers and the investors or providers of electricity are not infringed upon.
With the take-over of the power sector by the new owners, Nigerians have already built expectations for a better and improved quality of electricity supply since they expect an immediate end to the many years of epileptic power.
It is however, notably that even as the transition process proceeds swiftly, there may be some critical issues the new owners will be confronted with, that may necessitate tariff review.
Minister of Power, Professor Chinedu Nebo had at the handing over of the Abuja Distribution Company to new owner, KANN Utility Consortium Nigeria Limited raised concerns that there might be some critical issues with the initial operation of the sector like the increase in electricity tariff soon as the new investors starts operations because according to him, the current billing system is not actually cost reflective.
The exercise which was recently carried out across the country in a simultaneous schedule, opened doors for the much expected private sector investment in the sector. Government had through the transformation of the sector initiated since 1999 started seeking successful option to stabilise the sector. With the roadmap to the reform process of the sector conceptualized when the National Council on Privatization (NCP), set up the Electric Power Sector Implementation Committee (EPIC) to undertake a comprehensive study of the electricity power industry.
The key objectives of the committee were to prepare a power policy blueprint that will define government’s new direction for the electric power sector.