The Nigerian Bulk Electricity Trading Company Plc (NBET) has proposed a significant 30% increase in power prices.
This development has triggered concerns among Electricity Distribution Companies (DisCos), who fear the potential ramifications of such a steep hike.
The power sector was recently the focal point of a four-day stakeholders’ meeting in Lagos, which brought together representatives from DisCos, NBET, Electricity Generation Companies (GenCos), and the Transmission Company of Nigeria (TCN).
The main agenda of the meeting was NBET’s proposed price increase, which has been a cause for unease among industry players.
Sources familiar with the matter revealed that NBET’s proposition is closely linked to the floating exchange rate of the Nigerian naira. Under the previous exchange rate regime, NBET sold power to DisCos at a rate of N446 to the dollar, following the official exchange rate controlled by the Central Bank of Nigeria (CBN).
However, with the unification of foreign exchange markets, the naira is currently trading between N740 and N770 per dollar. Consequently, NBET believes that an adjustment in power prices is necessary to offset the currency fluctuations.
However, DisCos have expressed serious concerns over the proposed 30% increase, emphasizing the potential negative impact on their operations. The DisCos procure power from NBET and subsequently sell it to consumers.
If the price hike is implemented, DisCos anticipate significant challenges in maintaining their businesses and ensuring affordable electricity for consumers. They argue that purchasing power from NBET at a higher price would leave them with limited options for setting consumer tariffs, potentially burdening end-users with skyrocketing electricity costs.
During the stakeholders’ meeting, DisCos made their concerns known to the Nigerian Electricity Regulatory Commission (NERC), stressing that the proposed increase by NBET is exorbitant and could threaten the viability of their operations.
The DisCos believe that a more balanced approach is required, which takes into account the sustainability of their businesses while ensuring fair prices for consumers.
The outcome of the meeting, which concluded recently, is still awaited as the NERC has yet to release an official statement.
This silence has only served to heighten industry anxieties, leaving stakeholders in a state of uncertainty about the future of electricity tariffs in Nigeria.
The Nigerian power sector finds itself at a critical juncture, where the interests of DisCos and NBET clash, and the decision made by the regulatory commission will have far-reaching implications.
It remains to be seen whether the concerns raised by DisCos will be addressed and if a more equitable solution can be reached that balances the financial sustainability of DisCos with the interests of consumers.
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