The Managing Director of Kaduna Electric, Engr. Garba Haruna
hassuggested what he called a triple action strategy to solving the
challenges bedeviling the nation’s power sector.
The
strategies, as advocated by the electricity boss are reductions in the
cost of electricity generation through reduction in the cost of gas;
Central Bank of Nigeria’s intervention through provision
of low interest finance to the participants in the Nigerian Electricity Supply Industry and subsidization of electricity to
residential customers.
Engr
Garba Haruna who made the assertion yesterday while granting audience
to the House of Representative Committee on privatization and
commercialization during the latter’s oversight visit to the
company in Kaduna also called for the review of the capacity cost which the distribution companies are made to bear.
He
disclosed that Kaduna Electric has invested N4.5b in one year towards
its mass meters deployment programme. He also announced that the
Company’s desire to ensure full and timely metering of its customers is
been inhibited by the existing regulatory frame work which limits the
company’s annual investment in metering to N4.2b.
He also
expressed concern over the monthly energy invoice being submitted to
Kaduna Electric by both the Nigerian Bulk electricity Trading Company
and the market Operator. According to him “70% of the monthly invoice of
Kaduna Electric is from thermal generation companies even though the
bulk of the power supplied to the company
is from hydro stations”.
He
appealed to the national assembly through the committee of
privatization to come hard on the perpetrators of energy theft and
vandalism of power supply infrastructures by strengthening the existing
law against the menace.
Earlier, the Chairman of the House
Committee on Privatisation and Commercialisation, Alhaji Ahmed Yarima
disclosed that the essence of the oversight visit is to consolidate on
the gains recorded after privatization through enhance legislative
process. He charged the Management of the Company to ensure full
compliance with all its
contractual agreement with the authority. The
Director General of the Bureau for Public Enterprises, Dr. Vincent
Akpatare disclosed that the Federal Government is discussing with all
stakeholders with the view to addressing the identified contradictions
and challenges in the sector.
Thursday, 30 March 2017
Monday, 20 March 2017
ENERGY THEFT, VANDALISM CAUSES 70% OF UNPLANNED OUTAGES- KADUNA ELECTRIC.
The Management Kaduna Electric has called for strong collaboration
between the Company and its customers to bring to an end the twin menace
of energy theft and vandalism of power supply infrastructures.
The Team Lead, Media and Community Relations of the Company, Idris Muhammad made the call during an interactive session with customers at Rigasa Area Office, Kaduna on Thursday last week.
The Team Lead, Media and Community Relations of the Company, Idris Muhammad made the call during an interactive session with customers at Rigasa Area Office, Kaduna on Thursday last week.
A
statement issued by the Company over the weekend attributed over 70% of
unplanned outages and unannounced interruptions of power supply in its
franchise area to the activities of the perpetrators of energy theft and
vandals.
According to the spokesman of the electricity distribution company, “the twin menace of energy theft and vandalism are responsible for almost 70% of the unplanned outages being experienced in our franchise area with the attendant inconveniences and unnecessary burden on the customers.”
“We are all (the Company and the customers) are at receiving end; paying heavy price in terms of loss of expensive equipment and scarce resources while the perpetrators losses nothing”, he further stated.
The unwholesome activities of the energy thieves and vandals is not only impeding the Company’s efforts at ensuring steady power supply, but are also placing additional and unnecessary burden on the customers, he contended.
He therefore called on the Rigasa community to expose the perpetrators of these acts who constitutes nuisance to both the Company and the customers stressing that the “collaborative effort could not have come at a better time”.
A Community leader and the Chairman Gwamna/Mashi Roads Residents Association, Alhaji Abdullahi Lawan Adaraye charged all communities in the area to organize themselves and form neighbourhood associations to enable them address some the challenges identified during the interactive session collectively.
He pledged their association’s cooperation and appealed to the Management of kaduna Electric to ensure that all its service centres have the full compliments of staff and necessary logistics to discharge their responsibilities effectively.
According to him, “the present situation where Service Centres cannot attend to faults after 5pm due lack of personnel or functional vehicles contributes to the activities of the miscreants”.
The interactive session which had in attendance, community and religious leaders from Unguwan Sunusi, Badiko village, Gwamna road and Hayin Danmani, provided a veritable platform for exchange of ideas between the Company and its customers.
According to the spokesman of the electricity distribution company, “the twin menace of energy theft and vandalism are responsible for almost 70% of the unplanned outages being experienced in our franchise area with the attendant inconveniences and unnecessary burden on the customers.”
“We are all (the Company and the customers) are at receiving end; paying heavy price in terms of loss of expensive equipment and scarce resources while the perpetrators losses nothing”, he further stated.
The unwholesome activities of the energy thieves and vandals is not only impeding the Company’s efforts at ensuring steady power supply, but are also placing additional and unnecessary burden on the customers, he contended.
He therefore called on the Rigasa community to expose the perpetrators of these acts who constitutes nuisance to both the Company and the customers stressing that the “collaborative effort could not have come at a better time”.
A Community leader and the Chairman Gwamna/Mashi Roads Residents Association, Alhaji Abdullahi Lawan Adaraye charged all communities in the area to organize themselves and form neighbourhood associations to enable them address some the challenges identified during the interactive session collectively.
He pledged their association’s cooperation and appealed to the Management of kaduna Electric to ensure that all its service centres have the full compliments of staff and necessary logistics to discharge their responsibilities effectively.
According to him, “the present situation where Service Centres cannot attend to faults after 5pm due lack of personnel or functional vehicles contributes to the activities of the miscreants”.
The interactive session which had in attendance, community and religious leaders from Unguwan Sunusi, Badiko village, Gwamna road and Hayin Danmani, provided a veritable platform for exchange of ideas between the Company and its customers.
Friday, 17 March 2017
KADUNA ELECTRIC, RIGASA COMMUNITY RUB MINDS
As The Wheel Of Customer Appreciation Moves On
The Management of Kaduna Electric in a continuous effort to engage the customer and communicate its customer-centric culture has once again held the Customer Appreciation Day/Customer Forum, this time at Rigasa Area Office of Kaduna.
In his welcome address, the Business Development and Relationship Officer (BDRO) of Rigasa Area Office, Mr. Ibrahim Mohammed expressed his profound gratitude to the customers for accepting to attend what he termed “a stakeholder’s forum”.
He added that the aim of the gathering was to appreciate the customers, get their feedback and establish a mutual understanding.
He called on the residents who were in attendance to become goodwill ambassadors of Kaduna Electric by encouraging others to pay their bills and cooperate with our Sales Representative who have been assigned to resolve their complaints and distribute bills.
The Chief Marketing and Customer Services Officer, Mal. Murtala Bello who was represented by the Business Development and Relationship Officer, Barnawa Area Office, Mr. Sunday Yahya extoled the place of a customer in any business. According to him: “We are in business because of you and we need you to partner with us to make our services better”.
Explaining further, he appealed to the community to endeavor to settle their bills as at when dueadding that it is by so doing that the company can continue to provide the service and meet its financial obligation. He urged them to assist in the protection of the company’s installations, which he said are beneficial to both the residents and the company.
“We need your collaboration in the area of community policing, reporting cases of meter compromise and any form of energy theft and cooperating with staff in the areas of customer enumeration, bill distribution among others”.
The Chairman, Electricity Committee for the area,Hanyin Danmani, appealed to the community to pay their bills, urging them to support the company in whatever way they can.
He however called on staff of Kaduna Electric to be professional when dealing with customers by being patient with them while ensuring that they do not supply low voltage, which he said, will result in losses to the company.
In his keynote address, The Head, Corporate Communications, Abdulazeez Abdullahi who was represented by the Team Lead, Media and Community Relations, Mal. Idris Muhammad told the Rigasa residents that the Nigerian Electricity Supply Industry is interdependent with the distribution companies at the last end of the value chain. This situation, he said, puts Kaduna Electric in the position where it has to be collecting cash on behalf of the value chain.
He berated the activities of miscreants in the area, which he said is making the job of cash collection difficult in Rigasa, adding that the company records a monthly deficit of N630 million out of a N750 million target.
He therefore called on the community to expose their non-paying neigbours who he described as the people sabotaging the efforts of getting power supply to paying-customers. He promised to treat the whistleblower’s information with confidentiality.
He went further to caution staff to eschew any acts of misconduct, which he said is hampering the steady supply of electricity while urging members of the public to report any of such cases.
Some of the residents complained about the faulty transformer at Hanyin Danmani, high estimated bills among others grievances.
A customer, who identified himself as Dele, said some of the issues besetting the company could be surmounted if Sales Reps can become a bit friendlier and defaulting/culpable customers are punished for offences committed in order to serve as a deterrent to others. He also advised Kaduna Electric to introduce incentives that will encourage defaulting customers or tenants who have inherited debt on accounts to pay.
“The company can ask customers who have inherited a debt on an account for instance to pay 50% of an outstanding debt and 50% will be written off. This strategy has been adopted by the defunct NEPA at a point and a lot of customers responded, myself inclusive”, he stated.
The Management of Kaduna Electric in a continuous effort to engage the customer and communicate its customer-centric culture has once again held the Customer Appreciation Day/Customer Forum, this time at Rigasa Area Office of Kaduna.
In his welcome address, the Business Development and Relationship Officer (BDRO) of Rigasa Area Office, Mr. Ibrahim Mohammed expressed his profound gratitude to the customers for accepting to attend what he termed “a stakeholder’s forum”.
He added that the aim of the gathering was to appreciate the customers, get their feedback and establish a mutual understanding.
He called on the residents who were in attendance to become goodwill ambassadors of Kaduna Electric by encouraging others to pay their bills and cooperate with our Sales Representative who have been assigned to resolve their complaints and distribute bills.
The Chief Marketing and Customer Services Officer, Mal. Murtala Bello who was represented by the Business Development and Relationship Officer, Barnawa Area Office, Mr. Sunday Yahya extoled the place of a customer in any business. According to him: “We are in business because of you and we need you to partner with us to make our services better”.
Explaining further, he appealed to the community to endeavor to settle their bills as at when dueadding that it is by so doing that the company can continue to provide the service and meet its financial obligation. He urged them to assist in the protection of the company’s installations, which he said are beneficial to both the residents and the company.
“We need your collaboration in the area of community policing, reporting cases of meter compromise and any form of energy theft and cooperating with staff in the areas of customer enumeration, bill distribution among others”.
The Chairman, Electricity Committee for the area,Hanyin Danmani, appealed to the community to pay their bills, urging them to support the company in whatever way they can.
He however called on staff of Kaduna Electric to be professional when dealing with customers by being patient with them while ensuring that they do not supply low voltage, which he said, will result in losses to the company.
In his keynote address, The Head, Corporate Communications, Abdulazeez Abdullahi who was represented by the Team Lead, Media and Community Relations, Mal. Idris Muhammad told the Rigasa residents that the Nigerian Electricity Supply Industry is interdependent with the distribution companies at the last end of the value chain. This situation, he said, puts Kaduna Electric in the position where it has to be collecting cash on behalf of the value chain.
He berated the activities of miscreants in the area, which he said is making the job of cash collection difficult in Rigasa, adding that the company records a monthly deficit of N630 million out of a N750 million target.
He therefore called on the community to expose their non-paying neigbours who he described as the people sabotaging the efforts of getting power supply to paying-customers. He promised to treat the whistleblower’s information with confidentiality.
He went further to caution staff to eschew any acts of misconduct, which he said is hampering the steady supply of electricity while urging members of the public to report any of such cases.
Some of the residents complained about the faulty transformer at Hanyin Danmani, high estimated bills among others grievances.
A customer, who identified himself as Dele, said some of the issues besetting the company could be surmounted if Sales Reps can become a bit friendlier and defaulting/culpable customers are punished for offences committed in order to serve as a deterrent to others. He also advised Kaduna Electric to introduce incentives that will encourage defaulting customers or tenants who have inherited debt on accounts to pay.
“The company can ask customers who have inherited a debt on an account for instance to pay 50% of an outstanding debt and 50% will be written off. This strategy has been adopted by the defunct NEPA at a point and a lot of customers responded, myself inclusive”, he stated.
Wednesday, 15 March 2017
APOLOGY FOR POWER OUTAGE
The Management of Kaduna Electric hereby apologized to its customers in Gusau, the Zamfara State capital and environs over the power outage currently being experienced in that area. The outage was initiated by the Transmission Company of Nigeria to enable it crew carry-out maintenance work at Mando, Kaduna. We regret the inconveniences which the outage might have caused or is causing our esteemed customers while assuring all concern of restoration of normal supply as soon as TCN is done with the work. Remain blessed.
Monday, 13 March 2017
Kaduna Electric Visits Janruwa, Seeks Cooperation from Community
Following the recent installation of 500KVA and 300KVA in Janruwa 1 and Janruwa Extension
respectively, Kaduna Electric has gone a step further to engage the
community in an interactive session with a view to building a mutually rewarding relationship.
In his welcome address, the Leader of the JanruwaElectricity Committee, Major Jacob Iyela, enjoinedthe community members to protect the recently installed facilities, “As inhabitants of this community, we must support the efforts of Kaduna Electric by protecting these assets”
In a message, the Head Corporate Communications, Mr. Abdulazeez Abdullahi who was represented by the Team Lead, Media and Community Relations, Mal. Idris Muhammad
described the gathering as “a stakeholders’ meeting where both parties
are meant to deliberate on areas of mutual benefits”.
“The
electricity industry is such that for it to work all stakeholders in the
value chain must play their part. We as retailers of electricity depend
on you to settle
your electricity bills so that we will be able to meet our financial
obligations as a distribution company” he explained.
Mr. Abdullahi appealed to the community to protect the company’s installations against vandalism, report any suspicious activity and pay their bills as at when due.
The Business Development and Relationship Officer (BDRO), Barnawa Area Office, Mr. Sunday Yahaya decried the current state of cash collection which he said is affecting the operations of the downstream sector of the electricity industry.
He therefore called on members of JanruwaCommunity to reciprocate the efforts of Kaduna Electric by
ensuring prompt payment of their bills given that electricity business
is a capital-intensive venture without immediate return on investment.
Maj. Iyela commended Kaduna Electric and advised the company to look at other sources of generating power as a way of improving its efficiency.
Residents requested for an expansion of the electrification project to parts of the community that are yet to be connected and the need for quick complaints resolutions especially as it concerns cables that are hanging low and endangering the lives.
The Chief Marketing and Customer Services Officer, Mal. Murtala Bello in his response said the company is already in talks with web and non-web based payment vendors and currently at the final stage of the agreements as part of plans to keep adding to alternative payment channels.
According to
him: “One of the first things the company did immediately after take
over was to increase the number of payment/cash centers in order to make
them as close as possible to our customers with a view of easing
payment challenges”.
On whether the company will extend supply to other parts of the community, Mal. Bello said even though it is the desire of company to do that, it will depend largely on how economically viable it is for the company do so because the collection from the areas connected must be encouraging enough.
He went further to instruct officers covering the Janruwa area to make their contacts available so that they can easily be reached for prompt complaints resolution.
In closing, the Marketing Chief thanked everyone for making out time to be part of the stakeholders meeting while stressing the importance of an occasion such as this, “we need our customers to understand our business operations and that is part of the reasons we engage them in a forum like this”.
Wednesday, 8 March 2017
Full text of the speech delivered by Alhaji Yusuf Hamisu Abubakar, Chairman, Board of Directors, Kaduna Electric at the farewell dinner for participants of the 38th Kaduna International Trade Fair.
Introduction
With a population surpassing 170 million, Nigeria targets an ambitious 20,000MW of electricity generation by the year 2020 and to rank among the top 20 economies in the world. Nigeria’s current available generation capacity, estimated at approximately 6,000 MW, is inadequate to meet the unsuppressed demand estimated at approximately 15,000 MW. According to World Bank Report, only about 55% of the population currently have access to electricity; and for that segment of the population, only 30% of its needs are currently met. Meeting the generation targets set for 2020 requires substantial private-sector investment in the supply chain, including gas to power infrastructure, generation, transmission and distribution networks. Most of these are now private-sector-operated (except the transmission system).
Energy plays a fundamental part in the economic growth process of every economy. Several studies have shown a positive and significant link between electricity use and economic growth. Studies have also shown that insufficient, unreliable or costly access to power can be binding constraint to business and ultimately hinders growth.
The industrialization programme of the 1970s which saw the development of textile and other manufacturing industries in Northern Nigeria was greatly hampered by several factors which include access to finance, ease of doing business, unreliable and costly access to energy amongst others. While all the factors are important towards achieving industrialization and growth in the country, this paper mainly focuses on access to energy.
Energy cost is arguably one of the most significant cost elements in the production line, as such lack of reliable and affordable electricity can be attributed to the failure of industrialization in Nigeria. The Electricity Power Sector Reform (ESPR) Act which led to the privatization of the electricity asset in Nigeria was meant to address some of these challenges – however, it also opens the debate between affordability and cost reflectivity in the face of low electricity supply and weak purchasing power of the general populace.
Purpose of Privatisation
The purpose of the privatisation was to ensure increased electricity supply in the country, through enabling and preservation of efficient industry and market structures, while also ensuring the optimal utilisation of resources for the provision of electricity services. The reform also sought the maximisation of access to electricity services, by promoting and facilitating consumer connections to distribution systems in both rural and urban areas.
The reform, however, provided that the prices charged by licensees are fair to consumers and are sufficient to allow the licensees to finance their activities and to allow for reasonable earnings for efficient operation. The reform also made adequate considerations for safety of lives and equipment as well as protection of consumer rights.
Concept of Electricity Pricing in Nigeria
The privatization programme was premise on the provision of a cost reflective tariff - as relates to every business endeavour, having the right pricing is an essential requirement for success. Balancing between a cost reflective tariff and an affordable tariff is one of the biggest challenges facing the Nigeria Electricity Supply Industry (NESI).
Multi Year Tariff Order (MYTO) is the methodology used to set wholesale and retail prices in the NESI. It is a unified way to determine total industry revenue requirement in a building block approach; total cost associated with generation - total cost associated with transmission - total cost associated with distribution as well as regulatory charges.
Nigeria Electricity Regulatory Commission (NERC), being the regulator for the industry has the mandate to approve tariffs. In an effort to make electricity tariffs more affordable, NERC adopted sculpting of the tariff such that Discos are required to under-recover now (by charging less than the cost reflective tariff) and are allowed to recover in the future. This model, while bringing temporary ease on the retail tariff, comes with attendant challenge of how to manage the huge shortfall resulting from the sculpted tariff.
The sculpted average tariff for Kaduna Electric in 2016 was N30/KWH while the actual cost reflective tariff was N48/KWH. This was approved based on economic indicators (inflation, exchange rate, gas prices) prevalent in 2015 and the resulting shortfall from the sculpted tariff in 2016 amounts to more than N25 Billion.
The MYTO model also requires bi-annual review of these economic variables which has not been done since January 2016. By the time the exchange rate variable is adjusted in the model, the average cost reflective tariff for Kaduna Electric will be around N74/KWH.
Cost-Reflectivity vs Affordability
The crucial role energy plays in the development of the economy cannot be over emphasised. Industries in this part of the country can only thrive with reliable and affordable access to electricity. While this is much desired by all, the current structure does not fully support the realisation of this objective.
Charging a cost reflective tariff of more than N70/KWH at this period of economic recession is not only irrational but detrimental to the growth of the economy. Therefore, Kaduna Electric fully supports a fair and affordable tariff that will support growth and development within our franchise states. It is however important to note that as privately run company, decisions are guided based on its business case that does not jeopardise the interest of all major stakeholders.
The government has the overall mandate and authority to steer the course of economic direction in this country and she has a critical role to play in ensuring that this balance is achieved.
The Role of Government
Government interventions are necessary to moderate prices and make electricity more reliable and accessible. Government intervention can come through a combination of all or some of the following; by subsidizing the price of gas to thermal power plants, bearing the burden of exchange rate shock on the retail tariff, taking up responsibility of tariff shock due to low generation capacity as a result of security issues, support the Gencos and Discos to access cheap finance through international, regional or local developmental initiatives among others. This will go a long way in making electricity more reliable and affordable and thereby supporting the overall growth and development of the economy.
Conclusion
A clear link has been established between electricity consumption and economic growth. With an annual population growth rate of around 3% and an unemployment rate of nearly 15%, Nigeria is in pressing need of boosting its productive activities to curb crime and reduce poverty levels.
Manufacturing and other SMEs are the key drivers of economic growth, which is mainly challenged by reliable and affordable electricity supply.
For the reform in the electricity sector to be achieved, all stakeholders – Discos, Gencos, Government, all categories of consumers - must holistically work, and in some cases make difficult sacrifice towards the success of the industry.
As a Disco, we are committed to improving the quality and reliability of electricity supply within our franchise states. Significant investments have already been made in acquisition, studies, foundational ICT systems, working tools, metering, safety systems, replacement of existing systems, expansion of grid, maintenance of existing systems, working towards providing alternative payment channels through web, POS, ATMs, mobile etc. Further investments is being put in place to close the metering gap, have a robust Customer Relationship Management Systems, advanced Distribution or Operations Management Systems, as well as new infrastructure and grid expansion.
Our customers across all categories – Industrial, Commercial, MDAs and residential – have a responsibility to behave ethically and pay their electricity bills regularly and timely to enable us meet our market obligation and serve our customers well.
The government even has a bigger role to play in ensuring stability of the industry. The liquidity challenge currently faced must be addressed and issues currently affect the industry that are macroeconomic in nature such as FX risk, security challenge affecting generation capacity, impact of inflation must be owned and addressed by government to make electricity supply more affordable and reliable.
The synergy amongst these different stakeholders is necessary for electricity sector to become the catalyst of economic growth in Nigeria.
Thank you.
Yusuf Hamisu Abubakar, OON
Chairman, Kaduna Electricity Distribution Plc
With a population surpassing 170 million, Nigeria targets an ambitious 20,000MW of electricity generation by the year 2020 and to rank among the top 20 economies in the world. Nigeria’s current available generation capacity, estimated at approximately 6,000 MW, is inadequate to meet the unsuppressed demand estimated at approximately 15,000 MW. According to World Bank Report, only about 55% of the population currently have access to electricity; and for that segment of the population, only 30% of its needs are currently met. Meeting the generation targets set for 2020 requires substantial private-sector investment in the supply chain, including gas to power infrastructure, generation, transmission and distribution networks. Most of these are now private-sector-operated (except the transmission system).
Energy plays a fundamental part in the economic growth process of every economy. Several studies have shown a positive and significant link between electricity use and economic growth. Studies have also shown that insufficient, unreliable or costly access to power can be binding constraint to business and ultimately hinders growth.
The industrialization programme of the 1970s which saw the development of textile and other manufacturing industries in Northern Nigeria was greatly hampered by several factors which include access to finance, ease of doing business, unreliable and costly access to energy amongst others. While all the factors are important towards achieving industrialization and growth in the country, this paper mainly focuses on access to energy.
Energy cost is arguably one of the most significant cost elements in the production line, as such lack of reliable and affordable electricity can be attributed to the failure of industrialization in Nigeria. The Electricity Power Sector Reform (ESPR) Act which led to the privatization of the electricity asset in Nigeria was meant to address some of these challenges – however, it also opens the debate between affordability and cost reflectivity in the face of low electricity supply and weak purchasing power of the general populace.
Purpose of Privatisation
The purpose of the privatisation was to ensure increased electricity supply in the country, through enabling and preservation of efficient industry and market structures, while also ensuring the optimal utilisation of resources for the provision of electricity services. The reform also sought the maximisation of access to electricity services, by promoting and facilitating consumer connections to distribution systems in both rural and urban areas.
The reform, however, provided that the prices charged by licensees are fair to consumers and are sufficient to allow the licensees to finance their activities and to allow for reasonable earnings for efficient operation. The reform also made adequate considerations for safety of lives and equipment as well as protection of consumer rights.
Concept of Electricity Pricing in Nigeria
The privatization programme was premise on the provision of a cost reflective tariff - as relates to every business endeavour, having the right pricing is an essential requirement for success. Balancing between a cost reflective tariff and an affordable tariff is one of the biggest challenges facing the Nigeria Electricity Supply Industry (NESI).
Multi Year Tariff Order (MYTO) is the methodology used to set wholesale and retail prices in the NESI. It is a unified way to determine total industry revenue requirement in a building block approach; total cost associated with generation - total cost associated with transmission - total cost associated with distribution as well as regulatory charges.
Nigeria Electricity Regulatory Commission (NERC), being the regulator for the industry has the mandate to approve tariffs. In an effort to make electricity tariffs more affordable, NERC adopted sculpting of the tariff such that Discos are required to under-recover now (by charging less than the cost reflective tariff) and are allowed to recover in the future. This model, while bringing temporary ease on the retail tariff, comes with attendant challenge of how to manage the huge shortfall resulting from the sculpted tariff.
The sculpted average tariff for Kaduna Electric in 2016 was N30/KWH while the actual cost reflective tariff was N48/KWH. This was approved based on economic indicators (inflation, exchange rate, gas prices) prevalent in 2015 and the resulting shortfall from the sculpted tariff in 2016 amounts to more than N25 Billion.
The MYTO model also requires bi-annual review of these economic variables which has not been done since January 2016. By the time the exchange rate variable is adjusted in the model, the average cost reflective tariff for Kaduna Electric will be around N74/KWH.
Cost-Reflectivity vs Affordability
The crucial role energy plays in the development of the economy cannot be over emphasised. Industries in this part of the country can only thrive with reliable and affordable access to electricity. While this is much desired by all, the current structure does not fully support the realisation of this objective.
Charging a cost reflective tariff of more than N70/KWH at this period of economic recession is not only irrational but detrimental to the growth of the economy. Therefore, Kaduna Electric fully supports a fair and affordable tariff that will support growth and development within our franchise states. It is however important to note that as privately run company, decisions are guided based on its business case that does not jeopardise the interest of all major stakeholders.
The government has the overall mandate and authority to steer the course of economic direction in this country and she has a critical role to play in ensuring that this balance is achieved.
The Role of Government
Government interventions are necessary to moderate prices and make electricity more reliable and accessible. Government intervention can come through a combination of all or some of the following; by subsidizing the price of gas to thermal power plants, bearing the burden of exchange rate shock on the retail tariff, taking up responsibility of tariff shock due to low generation capacity as a result of security issues, support the Gencos and Discos to access cheap finance through international, regional or local developmental initiatives among others. This will go a long way in making electricity more reliable and affordable and thereby supporting the overall growth and development of the economy.
Conclusion
A clear link has been established between electricity consumption and economic growth. With an annual population growth rate of around 3% and an unemployment rate of nearly 15%, Nigeria is in pressing need of boosting its productive activities to curb crime and reduce poverty levels.
Manufacturing and other SMEs are the key drivers of economic growth, which is mainly challenged by reliable and affordable electricity supply.
For the reform in the electricity sector to be achieved, all stakeholders – Discos, Gencos, Government, all categories of consumers - must holistically work, and in some cases make difficult sacrifice towards the success of the industry.
As a Disco, we are committed to improving the quality and reliability of electricity supply within our franchise states. Significant investments have already been made in acquisition, studies, foundational ICT systems, working tools, metering, safety systems, replacement of existing systems, expansion of grid, maintenance of existing systems, working towards providing alternative payment channels through web, POS, ATMs, mobile etc. Further investments is being put in place to close the metering gap, have a robust Customer Relationship Management Systems, advanced Distribution or Operations Management Systems, as well as new infrastructure and grid expansion.
Our customers across all categories – Industrial, Commercial, MDAs and residential – have a responsibility to behave ethically and pay their electricity bills regularly and timely to enable us meet our market obligation and serve our customers well.
The government even has a bigger role to play in ensuring stability of the industry. The liquidity challenge currently faced must be addressed and issues currently affect the industry that are macroeconomic in nature such as FX risk, security challenge affecting generation capacity, impact of inflation must be owned and addressed by government to make electricity supply more affordable and reliable.
The synergy amongst these different stakeholders is necessary for electricity sector to become the catalyst of economic growth in Nigeria.
Thank you.
Yusuf Hamisu Abubakar, OON
Chairman, Kaduna Electricity Distribution Plc
Monday, 6 March 2017
Unreliable and Costly Access to Energy hampers Industrialisation ….Chairman Kaduna Electric
The failure of the industrialization programmes of the 1970s and the
early 80s especially in Northern Nigeria has been attributed to, among
other factors, unreliable and costly access to energy.
The Chairman, Board of Directors of Kaduna Electric, Alhaji Yusuf Hamisu Abubakar made the assertion in a paper titled Electricity as an Essential Component for Economic Growth in Nigeria: Challenges and Prospects presented on Saturday night at Kaduna during the farewell dinner organized by Kaduna Chamber of Commerce, industry, mines and agriculture in honour of exhibitors in the just concluded 38th Kaduna International Trade Fair.
Alhaji Yusuf Hamisu Abubakar who called for comprehensive and holistic review of the challenges confronting all participants in the Nigerian Electricity Supply Industry stressed the need for a balance between cost reflective tariff and affordability of electricity in Nigeria.
He argued that unless the contending issues of provision of qualitative and reliable supply through the adoption of cost reflective tariff and affordability of electricity by the citizenry, small and medium enterprises as well big industrial organization is urgently addressed, the country’s desire for industrialization will continue to suffer serious setback.
The electricity boss affirmed that the Nigerian Electricity Regulatory Commission, NERC the umpire in the Nigerian Electricity Supply Industry, NESI, tried to strike a balance, albeit unsuccessfully, by adopting the sculpting measure, where distribution licensees were directed to charge less than their cost reflective tariff in the interim hoping that they can be able to charge appropriate tariff later.
In his words,“Nigeria Electricity Regulatory Commission (NERC), being the regulator for the industry has the mandate to approve tariffs. In an effort to make electricity tariffs more affordable, NERC adopted sculpting of the tariff such that Discos are required to under-recover now (by charging less than the cost reflective tariff) and are allowed to recover in the future. This model, while bringing temporary ease on the retail tariff, comes with attendant challenge of how to manage the huge shortfall resulting from the sculpted tariff.”
He also dismissed, as irrational and detrimental to the growth of the economy, the erroneous impression being created in some quarters that electricity distribution companies, Kaduna Electric inclusive are calling for upward review of electricity tariff.
According to him, “charging a cost reflective tariff of more than N70/KWH at this period of economic recession is not only irrational but detrimental to the growth of the economy. Therefore, Kaduna Electric fully supports a fair and affordable tariff that will support growth and development within our franchise states. It is however important to note that as privately run company, decisions are guided based on its business case that does not jeopardise the interest of all major stakeholders”.
He contended that “the crucial role energy plays in the development of the economy cannot be over emphasised. Industries in this part of the country can only thrive with reliable and affordable access to electricity. While this is much desired by all, the current structure does not fully support the realisation of this objective”.
He called for government’s interventions in the areas of “subsidizing the price of gas to thermal power plants, bearing the burden of exchange rate shock on the retail tariff, taking up responsibility of tariff shock due to low generation capacity as a result of security issues, support the Gencos and Discos to access cheap finance through international, regional or local developmental initiatives among others” to moderate prices and make electricity more reliable and accessible”.
The government, he submitted, has the overall mandate and authority to steer the course of economic direction in this country and she has a critical role to play in ensuring that this balance is achieved.
The Chairman, Board of Directors of Kaduna Electric, Alhaji Yusuf Hamisu Abubakar made the assertion in a paper titled Electricity as an Essential Component for Economic Growth in Nigeria: Challenges and Prospects presented on Saturday night at Kaduna during the farewell dinner organized by Kaduna Chamber of Commerce, industry, mines and agriculture in honour of exhibitors in the just concluded 38th Kaduna International Trade Fair.
Alhaji Yusuf Hamisu Abubakar who called for comprehensive and holistic review of the challenges confronting all participants in the Nigerian Electricity Supply Industry stressed the need for a balance between cost reflective tariff and affordability of electricity in Nigeria.
He argued that unless the contending issues of provision of qualitative and reliable supply through the adoption of cost reflective tariff and affordability of electricity by the citizenry, small and medium enterprises as well big industrial organization is urgently addressed, the country’s desire for industrialization will continue to suffer serious setback.
The electricity boss affirmed that the Nigerian Electricity Regulatory Commission, NERC the umpire in the Nigerian Electricity Supply Industry, NESI, tried to strike a balance, albeit unsuccessfully, by adopting the sculpting measure, where distribution licensees were directed to charge less than their cost reflective tariff in the interim hoping that they can be able to charge appropriate tariff later.
In his words,“Nigeria Electricity Regulatory Commission (NERC), being the regulator for the industry has the mandate to approve tariffs. In an effort to make electricity tariffs more affordable, NERC adopted sculpting of the tariff such that Discos are required to under-recover now (by charging less than the cost reflective tariff) and are allowed to recover in the future. This model, while bringing temporary ease on the retail tariff, comes with attendant challenge of how to manage the huge shortfall resulting from the sculpted tariff.”
He also dismissed, as irrational and detrimental to the growth of the economy, the erroneous impression being created in some quarters that electricity distribution companies, Kaduna Electric inclusive are calling for upward review of electricity tariff.
According to him, “charging a cost reflective tariff of more than N70/KWH at this period of economic recession is not only irrational but detrimental to the growth of the economy. Therefore, Kaduna Electric fully supports a fair and affordable tariff that will support growth and development within our franchise states. It is however important to note that as privately run company, decisions are guided based on its business case that does not jeopardise the interest of all major stakeholders”.
He contended that “the crucial role energy plays in the development of the economy cannot be over emphasised. Industries in this part of the country can only thrive with reliable and affordable access to electricity. While this is much desired by all, the current structure does not fully support the realisation of this objective”.
He called for government’s interventions in the areas of “subsidizing the price of gas to thermal power plants, bearing the burden of exchange rate shock on the retail tariff, taking up responsibility of tariff shock due to low generation capacity as a result of security issues, support the Gencos and Discos to access cheap finance through international, regional or local developmental initiatives among others” to moderate prices and make electricity more reliable and accessible”.
The government, he submitted, has the overall mandate and authority to steer the course of economic direction in this country and she has a critical role to play in ensuring that this balance is achieved.
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