Electricity distribution companies (DisCos) say they have not made any profit from their $1.4 billion (N427 billion) investment in distribution assets.
The federal government privatised the power sector in 2013.
In a statement on Tuesday, Sunday Oduntan, spokesman of the Association of Nigerian Electricity Distributors (ANED), said with current situation, it is unlikely that the investors would recover their money, “which is already in the negative”.
He said the investors were still coming together because they were committed to meeting the terms of the performance agreement that they signed with the government and improving service delivery to their “long-suffering electricity consumers”.
The DisCos, who identified their major problem as the tariff gap which has created an excess of N1.3 trillion in their financial books, maintained that until the gap is addressed by the government, they cannot meet those commitments.
“We are here today because of a fundamental problem – the tariff gap. That is, the gap between what the government has specified as the price of the electricity that we distribute or retail and the true cost of the product,” he said.
“It is this gap that has solely contributed to the excess of N1.3 trillion that the DisCos are carrying on their financial books, an impediment to both the sustainability of the electricity market and the ability of the investors to meet the obligations of their Performance Agreement with the government, which should result in the improved metering, customer service, increased customer connections that electricity consumers demand and deserve. This gap remains unaddressed by the government.
“Of important note is that we are not advocating a tariff increase on electricity consumers, some of whom are already dealing with affordability issues. We are stating that the mandated tariff gap is a responsibility of the government and should be addressed by the government, so that Nigerians can receive the improved electricity delivery service that they deserve.
“DisCo investors, who paid $1.4 billion (N427 billion) for the distribution assets have not made any return on their investment, a condition which was the basis of the investment after the five-year performance period. Even worse is that, with current conditions, it is unlikely that they will recover their investment, which is already in the negative, anytime in the near term.
“However, this lack of sight of a return of investment or on investment, certainly, does not encourage the injection of borrowed capital or equity, that is key to driving the turnaround of NESI or providing the efficiency and signaling that will result in improved generation and the resultant tariff reduction.”
The DisCos, however, assured operators and stakeholders in the industry that there are better days ahead.