Contrary to the reports in some national dailies that electricity Distribution Companies (DisCos) in Nigeria would soon offer free power supply to consumers, the DisCos have disclosed that the initiative has not been approved.
A source in one of the biggest DisCos in Nigeria, who spoke to Nairametrics on the condition of anonymity, explained that though the initiative would alleviate the economic pressure of Coronavirus pandemic, certain processes need to be followed before such a decision can be taken.
According to him, the DisCos would come up with an estimated amount that it would cost them to offer Nigerians free power supply for two months, meet with the National Assembly to deliberate on it, then pass it before the Federal Government signs it into law.
Findings revealed that it could cost the DisCos an average of N30 billion to provide electricity for Nigerians and residents for one month. That means it would cost the Federal Government about N60 billion to provide free power supply for Nigerian in two months.
Can DisCos bear the cost?: Contrary to the expectations of some Nigerians that the DisCos should be able to shoulder such responsibility, experts explained that such would be a great burden on the 11 firms.
A PWC’s report on the assessment of the companies revealed that the companies could only collect 66% of electricity billed as revenue. For instance, in 2018, out of a total of N661.6 billion worth of electricity billed by Discos, only N437.9 billion was received.
That is not all; all 11 Discos are currently unable to pay tax because they have reported losses consistently since 2013. Also, their tariff shortfall has been a clog in the wheel of their progress. The tariff amounted to N384 billion, due to the fact that electricity consumers are not charged the cost-reflective tariffs.
Ikeja Electric speaks
To clear the air, the management of Ikeja Electric Plc (IE), one of the biggest DisCos in Nigeria, explained that it fully supports the on-going efforts of the National Assembly, in collaboration with the Federal Government, to consider a proposal on the possibility of providing free electricity for two months.
But Head, Corporate Communications, IE, Felix Ofulue, told Nairametrics in an interview that it is important for Nigerians to note that the initiative is only a proposal now and that it is still undergoing stakeholders’ reviews on its feasibility.
He said, “It has not been approved by the Government as a stimulus package or palliative. The ability of the DisCos to implement the proposed palliative is subject to the stimulus package being passed by the legislators and signed into law by President Muhammadu Buhari.
“We urge all our customers to continue to pay their utility bills as usual, while on our part, we shall continue to serve our customers first during this difficult period.”